Tax implications: using rental property in LLC for family

Tax implications: using rental property in LLC for family

Member since 2017 · 6 posts · 2 votes

We have a rental property owned by our partnership LLC that has been rented out for the past few years. We plan to use this property for our family at no charge/no formal lease for the next few years with the potential of renting out again in the future. We are not real estate professionals (tax purposes)

This move will generate a large loss for tax purposes - I understand as non Real estate professionals we can only deduct up to a certain amount of losses each year ~3k with carryforward. 

Is there any benefit of "collecting" rent on paper up to this maximum loss threshold or would it be better to report the maximum loss?  

Also can you stop or pause claiming "depreciation" on tax returns if we started 3 years ago?  As it won't benefit us to keep depreciating the value of this property during this max loss timeframe. 

Also any other advice on this situation is appreciated. 

thanks in advance!

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  • Greg ScottPro Member
    Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
    4y

    What you are proposing creates some tax-related complications that could cost you thousands of dollars.  I would not do anything until I had consulted with a CPA that understands real estate and the details of your personal tax situation.

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