All Forum Posts by: Nicholas Aiola

@Ying B. Based on your fact pattern, it seems the property wasn't in service (ready and available for rent) until you advertised it in November. Your parents (related parties) did not pay rent - gifting rent would not be a viable argument here. Generally, all costs leading up to that date you advertised it for rent will be added to basis and depreciated, not deducted as operating expenses.

It's important to note that even if your property is in service, that does not automatically mean that you can expense everything in full. Renovation costs may still have to be capitalized. You'll want to familiarize yourself with the tangible property regulations (which mentions the de minimis safe harbor rules).

Any passive rental losses that are suspended due to your MAGI exceeding the $150k threshold will be carried over.

@Kyle Scholnick SE taxes are only assessed on your wages within the S Corp. Profits in excess of your shareholder wages are not subject to SE taxes. Whether or not rent payments would reduce your reasonable salary calculation should be determined by you and your tax professional.

@Yonah Weiss Thanks, it's been a fun ride!

@Tom Fenoglio "Simple" does not exist in tax discussions ;)

LLCs do not impact income taxes. Single-member LLCs are disregarded by default, meaning all activity is reported directly on your individual tax return. Multi-member LLCs are partnerships by default, meaning a separate partnership tax return may need to be filed. That said, all activity will still ultimately be reported on your individual tax return via Schedule K-1.

I see your location is in Argentina. This could complicate entity structuring and tax implications of a US investment. I don't believe there is a tax treaty between the US and Argentina. I'd recommend consulting with a CPA and attorney who can sink their teeth into your unique situation and properly advise you.

@Kyle Scholnick Here are 2 good resources:

- https://www.thetaxadviser.com/...

- https://www.journalofaccountan...

@Kyle Scholnick You can pay yourself rent but you should be aware of the self-rental rules. You'll want to consult your CPA to analyze the numbers/details to see what would make the most sense for your specific situation.

@Jenning Y. All refi costs are costs of acquiring the loan and would be amortized over the life of the loan. No portion would be added to basis.

@Jenning Y. Closing costs are added to basis, not loan costs. Closing costs and loan costs are both reported on the same closing statement, so you have to separate them.

Similarly, refinance loan costs would be capitalized as a separate asset.

@Jenning Y. Correct, loan costs (purchase or refi) are not added to basis; they are capitalized separately, even on the purchase. 

@Jenning Y. The unamortized amount of the original loan costs would deductible in full and the new loan costs would be capitalized and amortized over the life of the new loan.