All Forum Posts by: Joseph Palmiero

You could save on self employment taxes by electing to have the LLC taxed as an S-corp.

Here are a few more points to consider.

In order to offset your W-2 you must first meet the definition of a short term rental which is having an average guest stay of 7 days or less.  Then you must meet one of the material participation tests.  The most common one is performing 100 hours in the activity and more hour than anyone else.  The more than anyone else requirement will eliminate one of you from being able to offset their W-2.  The way around this is if you both dedicate 500 hours or more to the activity.  This can be tough to do unless you have multiple STRs.

Congratulations on your first rental property! The first one was the hardest for me.  I had to stop the analysis paralysis and finally pull the trigger!  Take a look at https://www.biggerpockets.com/blog/tax-partners and/or browse through the responses from tax professionals on the site. With remote capabilities being widely available, you don’t necessarily have to choose a local professional unless you prefer to do so.

Yes.  You will be able to depreciate the property over 27.5 years assuming that it will be a long-term rental.  Generally, you will use your original purchase price plus any improvements.  Don't forget to allocate a portion of the original purchase price to land which is not depreciable.

@Account Closed is correct.  Using a S-corp for buy and hold real estate in most cases is not the best choice.  A S-corp may be a good option for certain real estate activities such as flipping.

I have used Vanguard for this in the past.  Then you can invest right into one of their many index funds.

The benefit of a S Corporation is that you can reduce self-employment tax on your flipping income. You can form a LLC and elect to be taxed as a S Corporation.

Spreadsheets are pretty simple and useful until you get over 5 or so units.  After that, I recommend Quickbooks Online.

LLCs provide no additional tax benefits compared to holding the real estate personally. 

That is correct. Only the partner with over 100 hours and more hours than anyone else (including non-spouse partners) will be able to use a loss against their W-2/Business income assuming that the average guest stay at the STR is 7 days or less.

Your LTR would be separate consideration.  In order to use losses from your LTR, you would have to qualify as a Real Estate Professional (REPS has its own set of tests) and achieve material participation on the LTR.