I have a business that is run as llc. I have a rental that has negative income. If I put my rental into my business llc can I lower my taxes by offsetting my business income with my rental loss.
Also I heard that with new tax law an llc has to pay taxes on only 80 percent of your llc income. So everyone who has rentals which have positive net income should be putting it into llc. Is that correct ?
Thx so much.
I'll assume your rental is passive and your other business is not and your LLC is a single member LLC. Putting the rental in your business LLC won't achieve anything from the standpoint of offsetting the rental's loss with the other activities gain.
No LLC is needed for the new 199A provision benefit assuming your activity qualifies for it in the first place.
"If I put my rental into my business llc can I lower my taxes by offsetting my business income with my rental loss."
The LLC makes no difference here. The only two situations in which you could offset your active business income with your passive rental losses is if:
- You are a real estate professional, or
- You make less than $150,000 from non-real estate activities, and even then you could only offset $25,000 (at most; your exact amount depends on your income from non-real estate activities).
"Also I heard that with new tax law an llc has to pay taxes on only 80 percent of your llc income. So everyone who has rentals which have positive net income should be putting it into llc. Is that correct ?"
No. If the 20% deduction applies to rentals at all (which most practitioners feel it does), then you will get the deduction whether or not you hold in an LLC or not.
Feel fre to PM me with any more questions.
Your rental business is considered passive while your business is considered active(my assumption - correct me if im wrong).
You can not net passive losses with active income.
You are eligible to deduct up to $25,000 of passive rental losses on your current year tax return if your adjusted gross income falls below $150,000.
The new tax code does allow you to a 20% deduction.
Your active business will benefit since you are making a profit
Your rental business will likely not benefit since its operating at a loss.
There are also income limitations on whether you can or can't take it.