All Forum Posts by: Katie L.

@Stu Owens

You could do this several different ways.  And it depends on a lot of different variables as well.  Is your partner a family member or other trusted long-time friend?  Will the properties have mortgages?  Will you be performing equal duties?  Putting in equal amounts of money? Are you worried about the stability of your partner in terms of marriage or finances?  What about liability concerns from tenants or creditors?

You are right that if you created a UT LLC, you would need to register it as a foreign LLC in California and pay the $800 minimum tax to CA. Alternatively you could create a CA LLC and register it as doing business in Utah. You will now need to pay income taxes in Utah for the income you earn from your rentals there.

Having a formal entity allows you to have a written agreement laying out all the decisions both of you will make and the roles you will play with regard to the properties.  It will describe which actions will need both of your approvals and which actions one partner can do on behalf of the entity.  For instance, do you want to restrict your partner from being able to encumber the properties?  Is there a dollar amount of expenditures you want to require unanimous approval?  You could also draft a sort of tenants in common agreement if you wanted to avoid a formal entity, but that gives you no liability protection.  If you are going to have debts attached to the property, you will want to make sure to watch out for any due on transfer clauses, or be ready to personally guarantee any loans taken out in the name of the entity.  Will you also be using the entity as a property manager for other properties or want an entity name for tenants to be able to write rent checks out to?

If you need lawyer or accountant names in San Diego, let me know.  Good luck!

*This post does not create an attorney-client or CPA-client relationship.  The information in this post is not to be relied upon and readers are advised to seek professional advice.

@David T.

I have names for you in San Diego if you're willing to work remotely.  You can also reach out to @Logan Allec as was already suggested since he is in L.A.  You'll definitely want to work with someone who is either CA-based or is familiar with CA laws if they live elsewhere.  Not sure what you consider to be fees that are too expensive, but paying for good advice is well worth it.  Working with someone who knows what he/she is doing could end up saving you money in the long run, possibly even paying for their fees with your savings.

@Steven Burr

I have recommendations for CPAs in San Diego if you’re interested in working remotely. Send me a PM if so. 

@Yuri Weinbaum

Are you purchasing the property via note?  Inter-family purchase, or third party purchase?  Rental property or personal residence?

 Thanks, Michael. I suppose we will have to wait for the regulations to come out. I’ve seen several groups like the ABA and AICPA submit comments. Someone told me she went to a seminar where the interim IRS comm was speaking and he said regulations were forthcoming this summer. So much for that seeing as summer is almost over...

I’ve been working off the assumption that rental real estate is indeed a business, being that it is engaged in for the purpose of profit or investment (as opposed to say, a hobby). Passive activities are still activities and I think the way 199A is written calling out specified activities that are disallowed shows an intent to disallow certain active businesses, particularly with the language about the reputation or skill of the principal. Seems Congress was specifically aiming to target passive activities as ones to qualify for the deduction.

The way I read it, schedule E or schedule C businesses should still qualify as well, and is not limited to pass through entities. Hence why I’ve been working off the assumption that the basic landlord would qualify. Though, as you say, many have losses anyway.

Interesting take, thanks for making me think from a new standpoint. Will need to wait for regulations I suppose and other guidance.

*this post does not create an attorney-client relationship nor a cpa-client relationship. It is for educational purposes only and was written prior to any case law or guidance on section 199A. It is not to be relied upon and readers are advised to seek professional advice.

@Michael Plaks why do you say that 199A will not apply to casual landlords?

@David Hungerford

I have referrals in San Diego if you’re willing to work remotely. 

@Michelle Eisenberg

Go for the CPA. You will need to file taxes in Missouri now too. If you need referrals, I have some in Southern California. Having your taxes done right might save you money in taxes. You’ll especially want to look into the new section 199A pass through deduction.

@Sheri Cabral What city are you in?  What kinds of services do you need from your real estate attorney?

@Account Closed

Unless you are one of these people who prefers to meet the accountant face-to-face or walk your documents in, you don't necessarily need someone local.  I would suggest you stick with a California accountant though, or at least one familiar with California laws since CA is sort of its own beast when it comes to taxes.  If you are willing to work with folks down south in San Diego or Los Angeles, let me know and I have several names for you.  I also have a firm in Palo Alto but they specifically work with high net worth individuals.  Otherwise my contacts don't really extend to up north much.  Good luck!