All Forum Posts by: Lance Lvovsky

Start now. Before you acquire your first rental, those expenses will be considered "start-up expenses" and can be expenses/amortized when you acquire your first rental

Gilberto Grajeda if you are not on the title, and your dad quitclaims the property to you, there could be a gift tax filing requirement. If both you and your dad are on the title, then there may still be a gift tax filing requirement depending on what the deed says

Jeff B. Section 179 expensing is not permitted for rentals

What kind of questions do you have? There are a handful of CPAs on here who are also real estate investors themselves. Kudos to you though for seeking out professional advice. I see far too often clients attempt to do things on their own, only to end up paying more in taxes. I don't have a good CPA in your area to refer you too, if you are only looking for a local one.

Is your friend a member in this LLC? There could be tax implications if he is not I.e. Could be viewed as a gift

The capitalization rules are the same whether property is held in a LLC or in your personal name. I was referring to tax planning from the standpoint of once you accumulate a substantial number of assets, you may want to help provide for your children, and in doing so, you could gift LLC membership interests while still maintaining control over said LLC. This is just one example.

I have an attorney as well who may be able to help you. Send me a PM.

The answer to your first question is it depends. Which is one of the most common answers you will hear. I don't believe there is a one size fits all, and what works for one person, won't necessarily work for you.

With that being said, generally it is best to have rentals in a LLC, but it is not necessary (key difference between what is "best" and what is "necessary"). And if anyone ever tells you that you cannot take business deductions if your rental is not in a LLC, run from them as quickly as you can. The differences really arise when you get into tax planning, as opposed to tax compliance (tax returns). There is more flexibility when it comes to tax/estate planning if you hold rentals in a LLC.

If you have rentals, generally you don't want to put them in a S Corp (or any kind of Corp for that matter).

I am not one to tell clients to hold each rental in a separate LLC. Especially if the value of your rentals is on the lower side. Think of it this way... if your rentals are $50k each, there is no reason of forming a separate LLC for each one.

Of course the above expressed on this public forum is my opinion, and is not to be construed as professional advice.

I need more facts, but as a sole properietor, yes you would file a Schedule E on your 1040. Did you open a Single Member LLC and obtain an EIN?

I would recommend getting a CPA. Not because I am biased, but because I have seen far too often people who start out investing in real estate, and try to do the taxes themselves. After a couple years when they accumulated more properties, they contact me for tax help. More often than not, I find errors in the tax returns they prepared themselves. Taxes are complicated, and there is nothing wrong about seeking help from a professional. A good CPA is a great investment, and you want someone in your corner who you trust.