How to take advantage of 2018 taxes

5 Replies

Hello all, I'm new to the real estate investment game in Boston. I currently own the rental property under my own name and deferring to put the property under an LLC/S-corp until I accumulate another one. Though, I'm not sure if deferring to structure the rental as an S-corp or LLC would hurt me in 2018 tax filing. Or should I get a business tax filing ID? What should I do in order to take the full advantage of the new tax code?

@Guy S.

What are you specifically looking to do when you transfer the title of your personal residence to an LLC/S-Corp.

You will not be able to report the rental expenses if it is you are living in the property as your personal residence.

You would not be able to exclude future appreciation based on section 121 exclusion.
You would pay money to structure the LLC/S-corp
You would pay annual fees for the upkeep of the LLC/S-Corp
You may potentially be required to file a business entity return requiring you to spend additional $$

Basit Siddiqi, CPA
917-280-8544

Interested in this thread...Basit, what Guy is talking about is not his residence, but a rental property currently in his name. This is the same situation I have and my CPA says just leave it in my name and get insurance. However, I am not realizing any of the depreciation or cost of upkeep on my taxes because my wife and I make too much money. Seems like it would be better to place it into an LLC with my next house and take the depreciation and upkeep as a loss against the income...looking for any thoughts

@Ken Bradley Yes, that's what I meant. I own a property under my personal name. I want to know if I should change the ownership to an LLC or possibly get a business ID in order to maximize the most in the new tax law.

@Ken Bradley - Thank you for the clarification. I totally misread that.

@Guy S. I suppose you are talking about the new 20% pass-through deduction. As strange as it sounds - you are not required to have an entity to take advantage of the deduction.
Another thing about the deduction is that your business needs to operate at a profit to take the deduction.
Real estate normally operate at a loss thanks to depreciation. So this is something to consider as well.

Basit Siddiqi, CPA
917-280-8544

@Basit Siddiqi Thanks Basit. So it sounds like I can just leave the rental property as-is without any entity changes and still reap the tax benefits.

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