Discussion:Rental Real Estate under sub S Umbrella
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Discussion Forum Index --> Consumer Questions --> Rental Real Estate under sub S Umbrella
Davewright1010 (talk|edits) said: | 12 May 2006 |
| I currently cannot deduct my real estate losses due to the fact that my AGI in excess of $200k. Can I incorporate my rental real estate business as a Sub S and deduct my rental real estate losses via Schedule E - line 28 ? | |
Mtmckeecpa (talk|edits) said: | 12 May 2006 |
| Dave,
No. Even if you could, an S corp, generally, is not vehicle of choice...more than likely an SMLLC (single member LLC)is your best choice. | |
| 12 May 2006 | |
| Very bad idea Dave. If an accountant suggested that, we'd take him out and shoot him. You'd rue the day that you put real estate inside a corp. Besides, it wouldn't change the character of the loss, still passive, still suspended. Raise the rent... | |
Davewright1010 (talk|edits) said: | 12 May 2006 |
| Why is it a bad idea to put real estate inside a corp ? .. or why can't real estate be put in a corporate shell ?
Another question: The losses are a result of depreciation.. any other way for me to capture these losses ? (I guess I could stop working and reduce my AGI, eh ?) Does the basis of the real estate still get reduced as on schedule E I still have to depreciate and then when the loss is computed, it is not allowed ? | |
Davewright1010 (talk|edits) said: | 12 May 2006 |
| What is the advantage of SMLLC vs. S Corp ? | |
| 12 May 2006 | |
| The losses aren't lost, merely suspended, and will offset future profits, or other passive income, or hit when you sell. You will get full credit, as long as you're alive. To explain the horrors of RE in a corp, there are other threads here that speak of that in detail. | |
Davewright1010 (talk|edits) said: | 12 May 2006 |
| JR1 - so the depreciation continues and the basis continues to be reduced ? Any specific thread you can lead me as it relates to the horrors of real estate in a corp shell would be most appreciated. Thanks for your valuable advice JR ! | |
| 12 May 2006 | |
| Thank you Dennis, you are dependable! Dave, the LLC has the same protections as a corp, we do like them now for real estate, and there's no tax consequences for rolling it there, still reports on Sch. E as before. But it's only useful for protecting each piece of RE from the others and from you. Basis only is reduced to the extent that you're able to take the losses. Since you can't, the basis reduction would also be suspended until final disposition or other passive gains to offset. | |
2006 and 2007 posts moved from a tax pro discussion:
| 10 April 2006 | |
| Hello
I have the following problem and was wondering how to best approach it. Here is a problem- A US citizen with a less than 10% limited share in an LLC in California that deals with rental real estate. The US citizen has become a Canadian resident and in Canada LLC's are treated as a corporation not a flow through entity. All distributions are treated as dividends and flow through expenses can not be deducted. Canada does however recognize S-corps as flow through entities with a "FAPI" election. This year the LLC had a capital gain and there are double taxation issues. Is there a problem in creating an S corp and moving the shares to the S corp? Would it mitigate the double taxation problem? appreciating any feedback, | |
| 10 December 2007 | |
| New to the site, I currently have two rental properties one under my personal name and one under my girlfriends name , I would like to know what are the benefits of transferring a property to an LLC or Corp if any and which one would be more logical to transfer to. | |
| 10 December 2007 | |
| Speedy, do a search on the topics, there have been numerous answers already posted. If you are not a tax professional I would recommend that you talk to one ASAP - making a mistake will cost you big-time. | |
| December 10, 2007 | |
| Get an accountant, and let no one talk you into putting your realty into a corp. An LLC maybe, probably. | |
Johnhuddleston (talk|edits) said: | 10 December 2007 |
| Speedy, I agree with Kevin that you should talk to a tax professional so that you can go into detail about your situation. I generally advise my clients to put rental properties into an LLC. The only reason is liability protection. In most circumstances, putting it into a corp will not improve your tax situation.
John Huddleston Seattle Bellevue Tax Accountant | |
| 3 March 2009 | |
| Can you claim the full rental loss as ordinary income on 1065, instead of showing the net loss on form 8825. If the company main business purpose is real estate investments and rentals. Do the passive limitations still apply? | |
| 3 March 2009 | |
| 'passive' and 'active' apply at the taxpayer level. some partners or members could be passive, others active, still others qualify as real estate professionals. Use the 8825 as you are supposed to for the rentals, and the 1065 for the Sch D transactions and 1065 ordinary business for the flips (if a 1065). 8825 for rentals for S-Corps | |
2009 post moved from a tax pro discussion:
| 14 March 2009 | |
| Please share your thoughts on this one.
Corporation has 3 members/officers. They purchased a piece of property to use as a 2nd location and for office rental purposes(to third-parties). However, the property mortgage was acquired under the corporate officer's name and not under the corporation. The mortgage has been paid by the corporation and the revenues & expenses debited/credited to their books. But the problem rises now, should the corporation claim the mortgage expense and revenue in their tax return...or should this be reported in the officer's individual's tax return. Since the property is technically owned by the officers they do not pay for the mortgage from out of pocket, the corporation does..shouldn't the corporation be able to claim this expense? If the corporation cannot report the income/expense, then the officers will now have to claim rental income in their tax return. Have consulted various colleagues about this and it seem like a gray zone. Help! | |
