Tax Advice and Tips for a new real estate LLC

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Tax Advice and Tips for a new real estate LLC

Ross Musil
Mt Pleasant, WI · Member since 2017 · 3 posts · 1 vote

Hello, I just purchased my first investment property along with a partner earlier this month in Racine, Wi. I am not sure yet if we will fix and sell or hold onto the property and rent it out, the property is held under our LLC. I am looking to get advice on tax reporting and book keeping, I do have some accounting knowledge already but would like to learn more. Are their any apps that would help me track expenses? Any advice on recording of repairs and improvements separately? Are their any special tax credits I should be using or looking into? I do plan on speaking with a tax accountant in the near future to discuss some of these topics but I figured I would reach out to the Bigger Pockets community first. Any and all help is appreciated.


Thank you,

Ross Musil

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  • Rebecca KnoxBusiness Member
    Specialist · Milwaukee, WI · Member since 2014 · 1k+ posts · 1k+ votes
    8y

    Eric Trost from SVA is a wonderful real estate focused accountant. Many local REI investors use him. Contact him as he will give you the best advice. He would probably suggest using a form of Quickbooks. When we first started, we used Expensify as a temporary solution.

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  • Nate R.
    Flipper · Madison, WI · Member since 2017 · 9 posts · 0 votes
    8y

    I have done a few flips. I did all of my expense tracking in Excel on the first and have used Quickbooks since then. In my opinion Quickbooks is worth the $30 per month. If you start working with an account they should be able to put you on their wholesale plan and save you a little money if you buy the online version of Quickbooks.

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  • Daniel HymanBusiness Member
    CPA · Milwaukee, WI · Member since 2016 · 2k+ posts · 1k+ votes
    8y
    Ross Musil Welcome to BP. There are some really great real estate CPA’s on these forums. If you have a specific tax question, I recommend using the search function. There’s a good chance that it’s been asked and answered before. If you can’t find what you’re looking for, feel free to blast it out. As mentioned above, QuickBooks online is the go-to software for expense tracking. The plus version allows for class tracking, which enables you to associate a transaction with its respective property.
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  • Basit SiddiqiBusiness Member
    Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
    8y

    @Ross Musil

    Congratulations on your first property

    You and your partner will be required to file a partnership return. The partnership return reports to the IRS and State the partnership's activity during the year. The partnership will then distribute a "K-1" to you and your partner. You will then report the information reported on this K-1 on your individual tax returns.

    Whether this is a fix and Flip or rental property will make a huge difference on how the partnership will report the information on the tax return.

    I normally suggest that beginners can track their expenses in Excel. However, since this is an LLC and the liability protection is afforded only if the books are kept proper - I would suggest getting a software to keep the books in order or to hire someone else to do it for you.


    Let me know if you have any specific tax questions.

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  • Ross Musil
    OP
    Mt Pleasant, WI · Member since 2017 · 3 posts · 1 vote
    8y

    Thank you all for the information, its clear I have a lot to learn. I will probably end up using QuickBooks since I do have a little experience with it already.

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