Regardless, section 469 dictates that for real estate losses, they are passive losses, (reported on form 8825 of your LLC return which in turn generates a line 2 on your K-1 partner income / loss) same as if you reported this rental income / loss on your 1040 schedule E... which then is limited to 25k if your other income falls below 100k. That is unless you can prove you are a real estate professional (e.g. at least 50% of your time is spent on real estate activities and at leas 750 hours per year). Then you could claim all your losses from real estate activities. One other reason this might make sense to do is because of SALT. If your property taxes exceed $10,000 you can't deduct the excess from your income where if the property taxes were reported as part of schedule E on your return because the property is rented or passed through from K-1 line 2 because your rented real estate is part of your LLC, and you are a real estate professional, all of that property tax expense would be deductible.
