Tax returns for LLC holding real estate

3 Replies

I own a property through an LLC with 5 partners. I know I need to prepare form 1065 and K-1s, but I can't figure out how rental income/expenses fit into Form 1065? Is rental revenue my sales, where do operating expenses go, etc? Do I need to fill out form 8825 and if so, where does that flow to 1065?

Thanks!

Moved this thread to the proper sub-forum. Hopefully it gets more visibility here. 

I like to let my accountant handle all that otherwise I'd have a head full of gray hairs. It keeps things simple for me and I can focus on investing. You definitely don't want to make any mistakes on those docs! He might be able to chime in,@Steven Hamilton II  

Fill out Form 8825 first.  Form 8825 is to your Form 1065 as Schedule E is to your 1040. All your rental income and expenses go on Form 8825.  If this is your partnership's first Form 1065, then all your properties are also listed on Form 4562.  In subsequent years, only new assets or depreciable improvements to existing assets are reported on a new Form 4562

After you finish Form 8825, follow the directions on line 21 to transfer your net rental income (loss) to Form 1065.   Form 8825 and form 4562 are attached to Form 1065 for submission to the IRS.

If you want to do it yourself, TurboTax Business (not the Home and Business version) supports Form 1065 and its associated forms and schedules.  

Originally posted by @Jon Jacobs :

I own a property through an LLC with 5 partners. I know I need to prepare form 1065 and K-1s, but I can't figure out how rental income/expenses fit into Form 1065? Is rental revenue my sales, where do operating expenses go, etc? Do I need to fill out form 8825 and if so, where does that flow to 1065?

Thanks!

First of all did you do your bookkeeping?  Second, I will be honest, the average person should NOT be preparing a partnership tax return. They are very complex and a lot of rules must be followed.
@Dave T Described it rather well; however, there is basis, capital accounts etc that need to be dealt with.

One issue I will point out is that on Page 1 of the 1065 you do not report rental income. It will be passed through to Schedule K of the 1065.

My suggestion is to find an accountant to handle it for you at least the first year. If you only have rentals in the partnership most fees would be rather reasonable.

Do not feel like you need to use someone local. Many of us accountants have clients worldwide. Payroll, bookkeeping, etc can mostly be done remotely.

Here is a great list of questions to ask a potential accountant:http://www.biggerpockets.com/forums/51/topics/70447-questions-to-ask-a-cpa

Also check out the www.NAEA.org page in your search. It should help you find someone local. If someone comes to me, I'll send them your way.

If you need help in your search or want to verify something don't hesitate to ask.

For example: I have clients worldwide and things are just as easy as I e-mail them, talking on the phone. I even use Skype and TeamViewer to communicate with clients so I'd highly recommend looking for one of the best with great references that interviews well with you.

So look for someone you can connect with that works out for your situation.

Feel free to ask here if you have questions.

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