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Old Today, 04:20 PM
 
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Can repairs on a properties in separate LLC's be deducted from income generated from other properties you own?

Suppose you had a big repair and long vacancy in one unit that's in its own LLC. The repair costs exceeded the rent it earned that year. Can repairs in excess of income be deducted from income generated on another property you own?

If not, would the properties being under the same entity change anything?

Thanks!
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Old Today, 04:48 PM
 
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If I remember correctly for an active investor each llc is a disregarded entity for tax purposes so while they have tax returns they flow to your personal tax return and all of profit and losses are combined into one taxable income number. So yes. You really ought to talk to a local accountant though especially since states income tax rules can differ.
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Old Today, 04:59 PM
 
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Quote:
Originally Posted by jackalope48 View Post
If I remember correctly for an active investor each llc is a disregarded entity for tax purposes so while they have tax returns they flow to your personal tax return and all of profit and losses are combined into one taxable income number. So yes. You really ought to talk to a local accountant though especially since states income tax rules can differ.
That makes sense. I will definitely not go this alone in regards to having a CPA once I build a portfolio - right now I'm trying to put out feelers before I decide to own any rental properties and get that ball rolling. Covering all the what-if's right now.
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Old Today, 05:04 PM
 
Location: Columbia, SC
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Definitely check with a CPA or tax professional on it.
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Old Today, 06:52 PM
 
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Quote:
Originally Posted by ddm2k View Post
Can repairs on a properties in separate LLC's be deducted from income generated from other properties you own?

Suppose you had a big repair and long vacancy in one unit that's in its own LLC. The repair costs exceeded the rent it earned that year. Can repairs in excess of income be deducted from income generated on another property you own?

If not, would the properties being under the same entity change anything?

Thanks!
You need to keep your rental income, expenses, depreciation, etc separate for each property for tax purposes. However, you file just one aggregate tax return per year (not counting quarterly estimates), so losses on one property would offset an equal amount of gains on another property for that tax year.

It's especially important that you keep depreciation and improvements separate for each property because that will help determine your "adjusted basis" on the property whenever you sell it and have to recapture the depreciation for tax purposes.

If you aren't familiar with these terms and how they apply to rental property, then I suggest you start reading the applicable sections on the IRS website. Or, do as I did and get the booklets from IRS pertaining to your situation and read them and underline the specific applicable sections. Then keep these booklets with your copies of your tax returns for when you have to refer back to them for something.

It's much easier to refresh your memory several years later if you have the booklets with the marked up important applicable sections. That way, you'll be able to remember WHY you did something a certain way or classified something in a certain category. Feel free to write notes and memos as to what you did and file them away with your copies of your taxes and the backup documentation. Believe me, you'll thank yourself later when you have to refer back to them.
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Old Today, 07:50 PM
 
Location: Phoenix, AZ
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Quote:
Originally Posted by ddm2k View Post
Can repairs on a properties in separate LLC's be deducted from income generated from other properties you own?

Suppose you had a big repair and long vacancy in one unit that's in its own LLC. The repair costs exceeded the rent it earned that year. Can repairs in excess of income be deducted from income generated on another property you own?

If not, would the properties being under the same entity change anything?

Thanks!
Boggles my mind that you would own rentals for any length of time and be so clueless about how the taxes work.

Hire a tax pro.


smh.
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Old Today, 09:12 PM
 
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Originally Posted by adjusterjack View Post
Boggles my mind that you would own rentals for any length of time and be so clueless about how the taxes work.

Hire a tax pro.


smh.
See post #3.

Quote:
right now I'm trying to put out feelers before I decide to own any rental properties and get that ball rolling. Covering all the what-if's right now.
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Old Today, 09:24 PM
 
Location: Salem, OR
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Your under an llc will be passed through on your personal taxes and your CPA will fill out Schedule E. You can look at that form and I think it will answer your questions as to how the IRS looks at it.
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