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Posted by MDinDestin on February 20, 2008, 7:53 am
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>
> > On Feb 15, 3:23 pm, Mario...@comcast.net wrote:
>
> >> My husband and I are in the process of buying a rental property--
> >> single story family home in Albuquerque, NM. Is it advisable to make
> >> it an LLC? Any other comments are appreciated.
>
> > You have a typo in the subejct.
>
> > Contact a CPA or tax preparer for the state you live in. Also
> > research on the web for difference between S corp and LLC. An LLC
> > passes all its income to its shareholders, and all of the income is
> > subject to self-employment tax, whereas in an S corp only the salary
> > portion is. Also, be sure ak your CPA about Schedule E. If you have
> > a loss from rental activity, you may not be able to deduct all or part
> > of it, so be aware.
>
> An LLC does not necessarily pass all of its income to its shareholders. An
> LLC is free to choose how it wishes to be taxed, and should it choose to be
> treated as a C-Corp, only compensation and/or dividends would be taxed on
> the personal return. If an LLC chooses S-Corp status, there is the
> possibility that some of the income can pass through without being treated
> as self-employment income. If it chooses to be treated as a
> sole-proprietorship/partnership then income from business operations will be
> self-employment income.
>
> However, in this case we're talking about a rental property, so all of the
> above is somewhat irrelevant. The reason for considering an LLC is to
> protect other assets should something go wrong with the rental property. The
> legal rationale has no impact on the tax decision. And since this is a
> rental property, passie loss limitation rules will apply.
>
> Ira Smilovitz
>
> --
> << ------------------------------------------------------- >>
> << The foregoing was not intended or written to be used, >>
> << nor can it used, for the purpose of avoiding penalties >>
> << that may be imposed upon the taxpayer. >>
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> << ------------------------------------------------------- >>
Having rental property is hard enough without overcomplicating it. If
you're just going to have this property, don't worry about an LLC or
other. You need liability insurance however. Oftentimes your
homeowner's insurance will allow protection for up to four units.
========================================= MODERATOR'S COMMENT:
When responding to a post, please include only the parts of the prior post
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--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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