Two rental properties owned jointly by husband and wife and filed on Schedule E. Recently added a third property under an LLC which is set up as a partnership.

[kamir1]

My wife and I own two rental properties jointly that we have filed taxes for on Schedule E of our joint tax return.   We recently set up an LLC and purchased a third rental property in the name of the LLC.  The LLC was set up as a partnership and we both have 50% ownership.  Do we need to file a separate return for the LLC or can we just add the third property to our individual tax return? 

[DS30]

What state is the LLC registered in?

[Rick19744]

What state do you live in?

[kamir1]

LLC is registered in Nevada.  We live in Washington State.

[kamir1]

Registered in Nevada.   We live in Washington State

[Rick19744 · Accepted solution]

Since you live in a community property state, you are eligible to include this rental on your Schedule E and are not required to file a partnership return form 1065.

The IRS will accept either filing; treat as a disregarded entity and include on your 1040 Sch E or file a partnership return form 1065 and then include the K-1 detail on your 1040.

See the attached IRS revenue procedure that addresses this:

https://www.irs.gov/pub/irs-drop/rp-02-69.pdf

Keep in mind that there could be some Nevada annual filing requirements since the LLC is organized in that state.  You would need to follow-up on this if you have not done so.