Real Estate holding company (LLC) Taxes

[bhawth22]

I own a couple of rental property homes and each is under an LLC. Additionally, I have a Holding Company (LLC - sole proprietor)  that owns the rental property LLCs. For taxes, how do I complete since all of the properties are under one LLC?  I have an individual 401k registered to the holding company that I plan to contribute almost all of the income to. Would I still do a 1040 schedule E that has all the properties?

[Anonymous_]

For state law purposes your structure may have some relevance, but for federal income tax purposes all of the LLCs are disregarded entities.

The LLCs that are owned by the "holding company" LLC are subsidiaries and are disregarded, as is the "holding company" LLC.

[bhawth22]

Thank you for the response. Just to ensure I understand this correctly, I'll still complete my taxes the same, filling out the sch E? But when contributing to the 401k through the parent company, how does the income flow through that entity?

[Anonymous_]

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@bhawth22 wrote:

...I'll still complete my taxes the same, filling out the sch E? But when contributing to the 401k through the parent company, how does the income flow through that entity?

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Unless I am missing something (and that is a distinct possibility), I do not believe income from passive activities, such as most rental income, qualifies to sponsor some sort of solo 401(k) (or other retirement) plan.

You need to have earned income (e.g., income from self-employment or as an employee) for that purpose.