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Seanz
Level 2

Real Estate Under LLC

I have a rental property under an llc partnership. There is no other business or other properties under this llc. The llc was registered in state of Texas. Can my business partner and I file the income and cost under our personal tax return? Or should we issue schedule K-1 for ourselves and then file under personal tax? We are trying to make our tax simple. Thanks   

1 Best answer

Accepted Solutions
AmeliesUncle
Level 11

Real Estate Under LLC

If you were trying to keep it simple, you shouldn't have formed the LLC.  😀

 

You need to file a separate Partnership return, and then the K-1s from the Partnership returns will be entered on your personal tax returns.

 

I recommend going to a tax professional for at least the first year for the Partnership return.

 

If you did not file an extension for the Partnership return, it is already 4 months late (soon to be 5 months late), with fairly large penalties.  This is another reason to go to the tax professional to try to abate those penalties.

 

Texas also may have a separate return/tax/fee for LLCs.

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3 Replies
AmeliesUncle
Level 11

Real Estate Under LLC

If you were trying to keep it simple, you shouldn't have formed the LLC.  😀

 

You need to file a separate Partnership return, and then the K-1s from the Partnership returns will be entered on your personal tax returns.

 

I recommend going to a tax professional for at least the first year for the Partnership return.

 

If you did not file an extension for the Partnership return, it is already 4 months late (soon to be 5 months late), with fairly large penalties.  This is another reason to go to the tax professional to try to abate those penalties.

 

Texas also may have a separate return/tax/fee for LLCs.

View solution in original post

DavidS127
Expert Alumni

Real Estate Under LLC

Because your LLC has more than one member, the "default" treatment by the IRS is a partnership that must file Form 1065 (U.S. Return of Partnership Income).  That Form 1065 will generate the K-1 forms each of the partners enter into their personal (Form 1040) tax returns.

 

You can do a Form 1065 tax return with TurboTax Business.

 

The other option for a multi-member LLC is to elect to be treated as a corporation, and file a corporate tax return (Form 1120 or Form 1120S).

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Carl
Level 15

Real Estate Under LLC

We are trying to make our tax simple.

Unfortunately, you did exactly the opposite by forming an LLC and putting the rental property(s) in it. You have to complete a 1065 partnership return for 2019 and all rental income and expenses will be report on IRS Form 8825 as a part of that partnership return.

The partnership will issue each partner a K-1 and all the rental income/loss will be reported in box 2 of the K-1. Numbers could be in other boxes to. But nothing concerning the rental property will be in box 1.

When you enter the K-1 on the personal 1040 tax return, any and all data cocerning the rentals will be on page 2 of the SCH E.

Your carry over losses will remain with the partnership/LLC. They don't get carried over to the personal taxes until you either sell the property or disolve the LLC/partnership. If you disolve the LLC, any carry over losses will be transferred the personal return. But they still won't be "allowed" until you sell the property.

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