Discussion:Self Rentals

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Discussion Forum Index --> Advanced Tax Questions --> Self Rentals

Discussion Forum Index --> Tax Questions --> Self Rentals

Seaside CPA (talk|edits) said:

23 March 2009
I have two individuals who each own 50% of S-Corp and LLC (taxed as partnership). LLC holds commercial building it rents to S Corp. LLC has a small loss this year (will increase rent for 2009). I know if LLC has a profit, it would be treated as a nonpassive activity. If it has a loss, it remains passive. Can individuals deduct the loss as passive activity as long as they meet the requirements (less than $100,000 in income, have enough basis, etc.) even though this is self-rental property, without getting into the grouping elections. Thanks for your input!

Seaside CPA (talk|edits) said:

24 March 2009

Larry0434 (talk|edits) said:

24 March 2009
If LLC has a loss, it is passive. If LLC has profit, it is material participation. Passive losses are not deductible but suspended.

Southparkcpa (talk|edits) said:

25 March 2009
If rental terms are arms length, I can't see why not.

The loss is generated mainly from interest, depreciation etc....

I believe you are fine as long as you meet the 100K AGI requirement.

Ekcpa (talk|edits) said:

25 March 2009
larry ,

why do you say passive losses are not deductible if the taxpayers meet "Active" participation rules they should fall under 25k loss rule. Question is can both partners meet active rules or will they have to flip flop year to year.

RoyDaleOne (talk|edits) said:

25 March 2009
You may want to research the self-charge rules.

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