1st Rental Tax Filing
Hello - my wife and I just finished up our first year with our rental. We converted our last home into a rental and had it rented out for the majority of 2024. This is our first time going through tax season and I'm looking for guidance and advice on the best way to do it. Currently the rental's mortgage is in our own names and not directly under our LLC. So we were filing it using a Schedule E on our personal tax return. If I did everything correctly, it is showing that we owe additional taxes on the rental property. We achieved a net income of just over $2k from the rental but the way it looks to me we'll be paying more than that back in taxes? Has anyone run into this same problem before? My initial assumption is to make sure the rental is setup in our LLC going forward, but hoping to get some advice how we can best finish this year out.
Most Popular Reply
You need to make sure you're following the Section 280A rules if you converted a personal residence to a rental. I.e., you're not using the "regular" Section 469 accounting rules. You're using a different, more restricted set of rules that probably limit your deductions to your income because you have a "mixed use dwelling."