@Critter-3
IMO this is not a rental ... it is simply investment income until you do something else with it past using it as storage.
Good point, and I wholeheartedly agree. However:
The only real expense you could have possibly taken on a Sch E that I can think of is the RE taxes and those should have been reported on the Sch A if you itemized deductions.
But, wouldn't that depend on the actual owner of the property? I ask, because I don't know if the RE taxes (and possibly mortgage interest) could be claimed on the SCH A, if the LLC is the named owner of the property. If passive income is the only thing tthe single member LLC deals with, then claiming it as an investment expense (or whatever) on SCH C wouldn't really help much.
@knightscove
We have 91 doors, SFH, Apartment buildings, mobile home park, and mixed use.
Since the TurboTax program can only handle of maximum of 15 SCH E forms, thats a maximum of 45 properties. So now I have the strong belief that you are aggregating at least half of your properties so you can use TurboTax. Is this so?
We have a steady crew of 3-4, we do all our own lawn care, painting, cleaning, repairs, roofing, flooring etc etc.
So do you pay your folks as W-2 employees? Statutory Employees? Or as 1099-MISC contractors?
I'm trying to learn and understand your setup here. I myself have been a landlord for around 30 years now. But I've only got (and ever had) three residential rental properties.
My lack of clarity arises because I'm wondering how you deal with payroll expenses if your crews are W-2 employees. I also wonder if your employees fall under the IRS criteria to be W-2 employees thus giving you no other choice or say in the matter.
I would think that if the LLC did not own the rentals, then the LLC would be a completely separate business reported on SCH C. The SCH C business derives it's income from the rentals which pays the SCH C business for it's services. Then in turn, the LLC pays it's employees from that rental income paid to it by the rental business(s).
From what I gather (and I'm not knowledgeable enough to understand "all" of the intricacies of this) what the rental business(s) pay the SCH C are deductible rental expenses on SCH E. Then the profits of the SCH C business which is determined after payroll and other expenses, is "earned" income. While that earned income will be subject to the additional 15.3% self employment tax, that income is also included when dealing with things like social security as well as the amount you can contribute to a qualified tax deferred retirement plan. (Such as a solo 401K maybe?)
Again, I don't understand all the intricacies of this, but I do know there are special tax considerations when one business you own, pays for the services of another business also owned by you.
Maybe its time to learn more?
I totally agree. Were I in your shoes today, I'd be seeking advice from a few estate planners, tax professionals, and legal professionals well versed and experienced in the corporate business world. I would want advice and information from multiple sources - not just one. It would cost money for that of course. But with what you've amassed at this point, I feel confident that it will be well worth every penny in the end.
