I am hoping someone can help me since i cant get an appointment with any local cpa's until next month. I have 3 rental houses, all single family homes. I want to seperate them from my personal taxes and my goal is to have them under there own llc or similar so i can deduct more business expenses, specifially I am trying to buy a vehicle for the "business" and want the expenses for the vehicle deducted from the rental profits. Can I do this? The properties are currently in both my wife and my personal names and have been filing under our personal taxes. Thanks!
The short (very short) answer here is contributing your rental properties to an LLC will not result in any more tax deductions than holding them in your name (or you and your wife jointly).
The short (very short) answer here is contributing your rental properties to an LLC will not result in any more tax deductions than holding them in your name (or you and your wife jointly).
So i cant have car expenses like i do with my other business? Thanks!
Yes, but whether or not you can deduct travel (car, etc) expenses is not dependent upon whether or not you have your rentals in an LLC.
If the reason that you are trying to move the ownership of the properties to their own LLC's is to protect yourself from liability if your tenant sues you, it may be too late. I think you want to talk to a lawyer rather than a CPA about this. I've been told that if you get sued and you claim that the property is owned by the LLC and thus they can't try to get your other properties or your personal property, their lawyer will investigate your finances. If the lawyer ever finds any co-mingling of funds between your personal accounts and the rental property, they will claim that the LLC was not completely independent of the other LLC's or your personal property and that all of that property is fair game for them to go for in their lawsuit. I'm told it's very hard to keep all of the finances separate.
If you did, good for you and you may be able to separate the properties out into separate LLC's, but then you also have the issue of ownership of the properties. If you have mortgages on the properties, you are unlikely to get the bank to change the ownership to the LLC without writing a new mortgage. You may have to pay off your 3% mortgage and need to get a 7% mortgage in its place.