Schedule C or Schedule E for rental property owned by LLC

Forum|Forum|1 year ago
March 8, 2025
2 replies
4 views

Bought a rental property which owned by LLC. Only I am on the LLC.

When I bought the place I had to renovate and repair it. I am currently managing it. I currently have a long term tenant.

Should I file Schedule C or Schedule E? or Both?

Additionally, would either of it reduces the MAGI?

TurboTax Premier Online

M-MTax

Level 15

You would use Schedule E to report your rental income and expenses.

Since you are not a real estate dealer nor do you provide substantial services for your tenant's convenience, you cannot report on Schedule C.

See https://www.irs.gov/publications/p527#en_US_2024_publink1000234065

DianeW777

Level 15

It depends. File your rental income on your individual return since you are a single member limited liability company (SMLLC).

Even though you are managing it and repaired it, you can still file it as a rental activity. There are passive activity rules however this income is not subject to self employment taxes.

Phaseout Rule: The maximum special allowance of $25,000 ($12,500 for married individuals filing separate returns and living apart at all times during the year) is reduced by 50% of the amount of your modified adjusted gross income that’s more than $100,000 ($50,000 if you’re married filing separately). If your modified adjusted gross income is $150,000 or more ($75,000 or more if you’re married filing separately), you generally can’t use the special allowance. This is because the special allowance is reduced to $0 since the modified adjusted gross income is over the $100,000 amount.

Sign into your TurboTax return > Search (upper right) > Type rentals > Click on the Jump to... link > Edit or Start the Rental Activity > Edit next to the Property Profile or General Info > Continue to the question about active participation
Continue to the end of the section for TurboTax to save your changes. Include the cost and all repairs as part of the building. Be sure to separate land (check the real estate assessment for the portion of cost that should be land).

The rules below explain the requirement to consider yourself a real estate professional. If you meet these rules you would use Schedule C, however one property may not meet these.

You are a real estate professional if all of the following are true:
- You materially participated in a real property trade or business.
- More than half of your time is involved in real estate activities during the year.
- You materially participated for more than 750 hours in this business.
- You materially participated in each rental real estate activity.

@SaifTax

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M-MTax

Level 15

@DianeW777 wrote:
It depends...

It does not depend. Unless the owner provides substantial services to renters or is a real estate dealer, the rental income and expenses are reported on Schedule E, not Schedule C.

@DianeW777 wrote:
The rules below explain the requirement to consider yourself a real estate professional. If you meet these rules you would use Schedule C

That is 100% incorrect. Even real estate professionals report income and expenses from their rental real estate on Schedule E unless, again, they provide substantial services to their renters or are real estate dealers.

@SaifTax