Filing Rental Real estate

[yekasi]

I have 3 Condos in florida and i live in NY.  These 3 condos are own by 2 single member LLC.  (My own LLC owns 2 units, and my wife's LLC owns 1 unit) I hired a management company in Florida to take care of these 3 condos for me.  They are also responsible for finding tenants, repairs..etc... and i pay a fee.  At the end of year they send me two 1099-MISC with the rent info on it.

In TurboTax Home and Business version , I have always been adding "HOA, Mgmt Fee, Repair, Utility, Tax, Travel, RE Tax" deductions items in the "Rental properties and Royalties" section.

I want to know, why cant I add my LLC as a "Business" in the "Business Income and Expenses" section, and just add my "HOA, Mgmt Fee, Repair, Utility, Tax, Travel, RE Tax" as a business deduction? and do it like that?  Is Schedule C only for real business that provides a service? 

 I am asking becuase my income is above 150k and none of those depreciation or netloss is offseting my real W2 wages and I experimented by adding the LLC income/expense in teh "Business Income and Expenses (Schedule C) " section and it actually does help my overall tax liability.   

Can you advise if that is right or wrong?

[maglib]

@yekasi   Generally rentals are PASSIVE and subject to Passive activity loss limitations  (do NOTE never use accelerated depreciation or expensing if limited). 

It takes a lot to be over the threshold.  Things like if it is you are a Real Estate Professional an in the business as if you were a realtor put you over the threshold.  But, otherwise there is strict rules on what would qualify to meet threshold of substantial service when you live in NY and you hire a management company.  The 500 hours needed is excessive and is per property and under audit, you would have to prove. Basically, if you have another job, hire a mgmt company, chances are you would not meet the rules.  You may want to read the following: https://www.irs.gov/pub/irs-pdf/p925.pdf

Real estate rentals

• You can generally use Schedule E (Form 1040), Supplemental Income and Loss to report income and expenses related to real estate rentals.
• If you provide substantial services that are primarily for your tenant's convenience, report your income and expenses on Schedule C (Form 1040), Profit or Loss From Business (Sole Proprietorship).

Personal property rentals

• Report income and expenses related to personal property rentals on Schedule C (Form 1040) PDF, if you're in the business of renting personal property.
• Report income on line 8l and expenses on line 24b of Schedule 1 (Form 1040), Additional Income and Adjustments to Income PDF, if you're not in the business of renting personal property.