All Forum Posts by: Account Closed

Hi folks, I'd appreciate any insight into this situation. We purchased a commercial building with a residential unit- an attached manager's quarters with separate entrance and locked door between the residential and commercial sections. We are planning to use the building primarily for short-term rentals, similar to a B&B, but may also have some retail space open to the public (like an art gallery). We are trying to wrap our heads around the best way to set everything up for tax purposes, liability, and just smart business planning. 

We set up an LLC in our state (Colorado) with federal EIN, and will set up separate bank and credit accounts for the LLC. It is owned by me and my husband with no other members.

Our accountant recommends NOT transferring ownership of the building into an LLC, which mirrors what I've read here since this is our primary residence. We anticipate that this will be our primary residence for 5-10 years. Following that, we may hire a manager and rent what is now our residence (or include it as part of the new manager's compensation).

We do not have a mortgage, so transfer to the LLC would be pretty easy if it turns out to be the right move. Our property insurance provider is fine adding the LLC name to the policy if we choose to do so.

The building needs a massive amount of work. We hope to have it partially operational by spring 2018 and fully operational by spring 2019. Since it is a commercial building and our residential section is very clearly and completely separate from the commercial space, I believe that even though the building is not operational our renovations to the commercial space will be business expenses. Any arguments that this would not be the case?

I'm thinking that our best option is to use the LLC to manage the property while we retain ownership personally. We will be very careful to keep commercial and residential use and accounting separate and keep a detailed paper trail of commercial renovations, contractors, building permits, etc, which will all be paid from the LLC's business accounts. We will be pumping cash into the LLC upfront to make this possible. (Should this be an interest-free loan from us to our LLC?) Short-term rentals will be managed by the LLC, payments will be made to the LLC. Any red flags here?

If we decide to move out of the building and hire a manager, assuming no plans to sell, would it make sense to transfer ownership to the LLC at that time? Or would you keep the structure of personal ownership/LLC management?

Anything else I should be considering?

Thanks in advance!

Hi, I am looking for accounting software with some specific features. I don't know if it exists, but would love some feedback - do you know of a solution that does this? If not, how are you managing these issues?

1) I don't need tenant screening, rent collection, or other management features - I'm happy with my current systems here.

2) I want to scan/upload receipts for property-related expenses, import transactions from my accounts, and reconcile the two.

3) I want the software (or online application) to look at these expenses and help me categorize them as improvements/depreciable (and over what term) or repairs.

4) I want the software to track all depreciable expenses over time 

5) I want to be able to connect each expense to a specific unit, property, or general expense.

6) I want to generate reports that I can send to my accountant with the details on my property-related expenses.

7) Not totally necessary, but it would be really cool if the application would also use projections to estimate my expected taxes based on expenses/income to date.

Thanks for any input!