All Forum Posts by: Jennifer Bott

i'm still depreciating Unit 3.  I just don't forecast renting it all. it's personal living space for family & friends.  So I don't want to continue depreciation it, but it's not technically a disposition. 

I used to rent 2 apartments on my property, but after Unit 2 tenants left in May of 2023, I decided not to re-rent Unit 2.   I had been depreciating this unit.   I can't exactly report it as a disposition because I'm not selling my home.  What is the tax treatment with respect to reporting, depreciaiton, etc.

We own several multi-families and I'm clear on the safe harbour ruling to allow those interests to be treated as a business for purposes of the Qualified Business Income Deduction.  What I'm not clear about is whether this also applies if I rent out part of my personal residence.   We live in a 3 family home, and are now renting out the other two units, while we are living in the main unit.   Would the 2 sections we are renting both qualify for the qualified business income deduction?  We meet all the requirements listed in terms of hours, separate books, etc...

We own several multi-families and I'm clear on the safe harbour ruling to allow those interests to be treated as a business for purposes of the Qualified Business Income Deduction.  What I'm not clear about is whether this also applies if I rent out part of my personal residence.   We live in a 3 family home, and are now renting out the other two units, while we are living in the main unit.   Would the 2 sections we are renting both qualify for the qualified business income deduction?  We meet all the requirements listed in terms of hours, separate books, etc...

We took a loan out against one of our rental properties and used the proceeds to both buy another, and fix up another. Where do I deduct the mortgage interest, on the original property used to secure the loan?  or on the properties the loan was used for?  

We have an LLC holding our 10 rental properties. My husband, single member, gave consulting advice to a friend with respect to the rental real estate business and helped him acquire properties, set up an LLC etc. and was paid to do so.

Would this income he received be considered passive, and reported on Sch E within our LLC? If so, would it be spread out as 'other income' across the properties? Should this friend send us a 1099-Misc? Want to confirm that it would not be subject to SE taxes....

Yes, that has always been my understanding, which is why I was confused on the previous posts about "reporting" of the draws, and how if done incorrectly, can possibly pierce the veil of protection.  I'm just planning on notating in my checkbook items as draws.  Is there anything more to it than this?

Keith - Like Jeff, I'm setting up a single-member LLC for our rentals, which will be reflected on Schedule E as it's passive income. In terms of taking draws, after summing up the total draws for the year, how and where should it get reported on Schedule E? Income less expenses is straightforward - it's the draws and related reporting that I'm unsure about.

My husband and I have 4 rental properties, and we're strategizing on the best way to protect our personal assets. I'm not sold on setting up an LLC, for several reasons. Putting all 4 properties into an LLC would mean that any lawsuits arising would put all those properties at risk. Setting up and maintaining separate LLCs for each property gets costly (in MA it's $500 start-up fee and $500 per year filing fee for each LLC). And while setting it up is fairly easy, maintaining complete separation of money (separate bank accounts, credit cards, money draws and deposits) can be rather difficult - any mistakes could disregard LLC status in events of litigation. Also, it seems it's getting easier to "pierce the veil" of protection, as seen in court cases around the nation as of late.

Umbrella insurance is great, but in cases of an enormous claim, would not protect our personal assets.

So my question is, what about spousal separation of assets? If my husband is the sole owner of the rental properties, and we legally remove his name from our joint ownership of our personal residence, so that I become sole owner, wouldn't that protect (my) personal residence from lawsuits against my husband and his properties? We do file a joint return, however I don't see that as any right to co-mingle our assets in event of claims. Any advice would be appreciated.

My husband and I have 4 rental properties, and we're strategizing on the best way to protect our personal assets. I'm not sold on setting up an LLC, for several reasons. Dumping all 4 properties into an LLC would mean that any lawsuits arising would put all those properties at risk. Setting up and maintaining separate LLCs for each property gets costly (in MA it's $500 start-up fee and $500 per year filing fee for each LLC). And while setting it up is fairly easy, maintaining complete separation of money (separate bank accounts, credit cards, money draws and deposits) can be rather difficult - any mistakes could disregard LLC status in events of litigation. Also, it seems it's getting easier to "pierce the veil" of protection, as seen in court cases around the nation as of late.

Umbrella insurance is great, but in cases of an enormous claim, would not protect our personal assets. 

So my question is, what about spousal separation of assets?   If my husband is the sole owner of the rental properites, and we legally remove his name from our joint ownership of our personal residence, so that I become sole owner, wouldn't that protect (my) personal residence from lawsuits against my husband and his properties?  We do file a joint return, however I don't see that as any right to co-mingle our assets in event of claims.   Any advice would be appreciated.