Meridian, MS · Member since 2019 · 14 posts · 0 votes
When buying, fixing, and renting property, how do i handle the business with taxes? I operate under an LLC, so should I just report rental payments as income taxes or is there more to it?
Rental Property Investor · MN · Member since 2017 · 864 posts · 555 votes
7y
Hey @Mike Shirley I'd recommend finding a solid bookkeeper and CPA to consult with on this.
It'll be reported as rental income but structured correctly using depreciation and cost segregation (in some cases) you will be able to claim a passive loss on not owe income tax on your rental income
Rental Property Investor · MN · Member since 2017 · 864 posts · 555 votes
7y
Hey @Mike Shirley I'd recommend finding a solid bookkeeper and CPA to consult with on this.
It'll be reported as rental income but structured correctly using depreciation and cost segregation (in some cases) you will be able to claim a passive loss on not owe income tax on your rental income
Attorney · Clifton, NJ · Member since 2015 · 1k+ posts · 328 votes
7y
@Mike Shirley I agree with Jake that you should find a good experienced CPA to help you. There is not only the rental income, but expenses, depreciation, cost segregation, etc. lots of good tax tools to help :)
Specialist · Scottsdale, AZ · Member since 2019 · 44 posts · 30 votes
7y
@Mike Shirley Rent is inherently a passive activity. That means that losses can only offset passive gains. For most people, we have active income from our job or business and real estate is a second form of income. There is a way to turn passive income/losses from real estate into active income/losses by declaring real estate professional status on your taxes. There are two rules to being a real estate professional: 1. 750 hours per year in qualified real estate activities 2. 50% or more of your time has to be spent in real estate.
This can work as long as one spouse can pass these rules. There are other considerations like grouping activities and self employment taxes, so like the others have said, call a CPA.