Operating rentals under a LLC

3 Replies

Hello BP,

I have some questions regarding operating multiple rentals under a LLC. I am trying to move my rentals under my LLC, when I do that do I have the payments be directly to my LLC? If so, how would I access the cash flow and what are the tax implications going forward? Thank you!

Originally posted by @Bryan Pham :

Hello BP,

I have some questions regarding operating multiple rentals under a LLC. I am trying to move my rentals under my LLC, when I do that do I have the payments be directly to my LLC? If so, how would I access the cash flow and what are the tax implications going forward? Thank you!

Yes, you want to sign a lease and open a bank with LLC, sent rent to your LLC address or bank account, at the least.

If it is a single member LLC, you would still report your rental activities under schedule E in your personal return.

Even if it is a SMLLC, you would keep a separate LLC book. In your book, when you take out cash as payment to you for personal purpose(like salary or profit), you would book that as your distribution.

Taking out money from LLC as described above has no tax implications.

You pay taxes on the rental income as you earn it. The money you take out as distributon would already have been taxed or will be taxed. 

People get confused on what gets taxed. 

As you earn money from rent, the net amount get taxed. Let's say your net rental income was 1500 this year. You would keep that in your LLC bank account. You would pay tax on it.

If you have to take that amount for vacation, it is not taxed again. You already paid taxes. You just need to book that amount as distribution in your LLC'S book.

Hope that makes sense.