@texasbevo2 wrote:
In 2025, we decided to put these properties in partnership LLC.
I didn't want to trigger a taxable event should I decide to transfer rentals into an LLC.
Question is should I continue filing rental income/expense/mortgage interests including prior year passive losses this year and form 1040 OR rollover rental passive losses including incurred last year expenses, depreciation and mortgage interests (while it is in my name) onto the new LLC and form 1065 (TT business)?
Can you clarify? Did you transfer the property to the LLC or not?
For non-tax purposes, if you transferred the property to the LLC, then as Mike mentioned, your mortgage company may not allow the transfer and require your entire mortgage to be repaid immediately.
For tax purposes, if you transferred the property to the LLC, you need to file Form 1065 as a Partnership (unless you are in a Community Property State and the only members are two spouses). It isn't an option to keep filing it on your personal tax return after it was transferred. If it was transferred mid-year, you'll have a partial year on your 1040 and a partial year on the 1065.
Carryover passive losses are something that is only on a 1040.
