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Posted by Benjamin Yazersky CPA on March 7, 2007, 5:08 am
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> I currently own a home, and I am interested to buy a 2nd
> property (Condo) for rental investment. I appreciate if you
> can help me with the following:
>
> 1) What is the complication if I were to buy the property
> under my name before setting up LLC and transfer the
> property over? Or will it be simple if I were to set up LLC
> first before buying? I am not familiar with how the lender
> would treat my application under different entity -- me VS
> llc.
Your biggest issue may likely be with the lender. They may
not want to allow you to transfer to an LLC after they lent
you the $$$$$$$$.
> 2) If I did not set up LLC but instead buy the property
> directly under my name, would I get a tax deduction on the
> property expense? like the interest, property tax, etc?
An LLC is usually an ignored entity for tax purposes.
> 3) I heard that LLC must show a profit 2 years out of 5
> years. So if I were have the investment property under the
> LLC, and I did the deduction of depreciation over 27.5
> years, I think I would be constantly showing negative cash
> flow. So, how would I make the property turn profit 2 years
> out of 5 ?
I think you are referring to the hobby loss rules. Having
an LLC or not won't affect the hobby loss rules.
--
___________________________________
<<< Benjamin Yazersky, CPA [NJ & NY] >>>
-----> real address on hobokeni or hobokenx <-----
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