Hi @globug666 Let's answer your question now. 🙂
Do we file a Partnership tax return and claim all income and expenses there for this rental property?
Yes. You'll need to complete a 1065 Partnership/Multi-member LLC tax return.
It is saying we put it on Schedule E on our personal taxes? But if that is the case what about the LLC that we formed?
In a way yes, but not as directly as your probably thinking. Here's the basics of how it works.
All rental income/expenses/depreciation will be reported on the 1065 return. Once that return is completed the partnership will issue each partner a K-1. Each partner will need that K-1 to complete their individual 1040 tax returns. After the K-1 is entered into your personal 1040 tax return, the information from the K-1 pertaining to the rental will end up on page 2 of the SCH E of your personal 1040 tax return.
Now when setting things up in the 1065, understand that absolute, total perfection in that first year is not an option. It is a *MUST*. Even the tiniest of mistakes will grow exponentially as the years pass. Then when you catch the error years down the road the cost of fixing it will be high.
So if you have questions, *ASK* the question. Dont care how dumb you may thing your question is either. Not asking it can (and probably will) cost you $$$MONEY$$$ later down the road.
