All Forum Posts by: Zachary Bohn

@Ann B. with the 645 election you are able to file one return for a qualified revocable trust and estate income tax return. The previous comments I believe were talking about an estate return which is Form 706. For most people with small estates that won't need to be filed. Since everything avoided probate it will be best to get an appraisal for everything to get an appropriate value with support in the event of an audit. 

@Account Closed Are you a CA resident? S-Corp income passes through to the owner's personal return and you would still be subject to CA tax on income produced in Indaina. 

@Morris Sandvig you can only get an FHA loan on an owner occupied property, and generally need to live there at lease one year. You can get an FHA loan on properties that have up to 4 units. In general you can only have one FHA loan at a time but there are some exceptions that would allow for a second FHA loan

@Alexander Spira 

A taxpayer qualifies as a real estate professional if (1) more than one-half of the personal services the taxpayer performs in trades or businesses during the tax year are in real property trades or businesses in which the taxpayer materially participates, and (2) hours spent providing personal services in real property trades or businesses in which the taxpayer materially participates total more than 750 during the tax year.

You have to meet both tests not just satisfy the 750 hours. If more than half your hours during the year between work and the rentals, aren't dealing with the rentals then you won't pass the first test.

@Chris May I know this may be a struggle getting your primary residence loan, but moving a property to a C-Corp for that reason is generally not a good idea. Putting the property in a C-Corp will get rid of the cap gain benefit when you sell and it makes getting any money from the property a lot harder without paying higher taxes. 

Have you been in contact with a mortgage broker yet? I thought I was going to have issues as well with mine but ended up getting it through

@Henry Li no you aren't double taxed when you take a salary from the S-Corp. The S-corp gets a deduction for the salary then you would have a W-2 from the S-Corp. 

If your average commission is less than $50k, then the setup and maintenance of an S-corp most likely wouldn't save you enough to make it worth it. The only thing you will save on is the payroll taxes, and not income tax if you did go the S-Corp route. 

@Henry Li

Yes, you can setup an S-Corp for your real estate commissions, but the issue is that it will also require you to take a reasonable salary from the S-Corp. Some brokerages will either not send out a 1099 for the S-corp and then you just report all of the income in the S-Corp or if the brokerage will not do that and still sends a 1099 to the individual, they will show it on Sch C as both income and expense with the expense line saying "income reported under EIN#) 

You can put properties in an LLC but if you have a mortgage on the properties you may trigger the due on sale clause. I would never recommend holding any properties in an S-Corp.

@Henry Li if you are going to have a home office, it needs to be a separate room that is used solely for business. You are only going to be able to deduct the percentage of expenses for that room(Room Sq ft/Overall Sq ft x expenses). If the room you use isn't a very big space in comparison to the rest of the house it may not be a big expense.

@Andrew Varney If you are going to hold the properties in your personal name then there really isn't a reason to keep the LLC open. There wouldn't be a tax benefit of having the money flow through the LLC, since it will still eventually end up on your personal return.

@Raj Kothari what exactly are you wanting to get into? How much of a gain will you have on the property?