BUSINESS OWNER AND REAL ESTATE INVESTOR TAX HELP

5 Replies

So I left my CPA's office today feeling a little down. I thought that I had some legal loopholes that would help my business out using Real Estate.

Here is the scenario: I have two commercial buildings. One houses my business and the other is empty. I wanted to rent the empty one to my business for $3500.00 a mo. $1500 would go to pay PITI and $2000.00 would go to me.

I can do this but there arent any real tax advantages on the 2000.00 portion

I thought the extra $2000.00 would be a savings because it would be taxed as passive income and not earned income. Turns out that tax laws have changed and there is a P.I.G. law that wont allow me to do this.

Can anyone expound on this?

Is there anything that I can do here to lessen my taxes?

Aren't you able to depreciate the property, which would shield some of that rental income?

Originally posted by @Travis Elliott :
I thought the extra $2000.00 would be a savings because it would be taxed as passive income and not earned income. Turns out that tax laws have changed and there is a P.I.G. law that wont allow me to do this.
Can anyone expound on this?

Is there anything that I can do here to lessen my taxes?

@Travis Elliott ,

That income can only be used to offset the income from that building due to the fact that it is a part of your principal business.

Passive income and Earned income have the sale rates. now if you business is a sole proprietorship it will be taxed subject to SE tax; however, otherwise it is Just ordinary income rates.

The category of passive only affects the fact that losses can be limited.

Thanks Steve.

My business is a S-corp. So I can rent it to my company triple net and wright off the mortgage utilites etc but nothing more I guess

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