Wife and Husband listed on LLC and have a rental property in the business name

[Divamom82]

My spouse and I purchased a rental property under our LLC (Business). Do we need to complete a K-1 / 1065 as well as put the information on our joint return under a schedule E?

[MaryK4]

Yes, you will need to file as a partnership unless you elect to be taxed as a corporation OR you live in a community property state.

A married couple may choose to treat a business entity as a partnership or as a disregarded entity if:

• The business entity is wholly owned by the couple as community property under the laws of a state, a foreign country, or possession of the United States;
• No person other than one or both spouses would be considered an owner for federal tax purposes; and
• The business entity isn't treated as a corporation under Regulations section 301.7701–2.

[Divamom82]

But it will still need to be reported on the personal under a schedule E correct.

[MaryK4]

Yes, the information will flow to the Schedule E on your personal return.

@Divamom82

[Carl]

A married couple may choose to treat a business entity as a partnership or as a disregarded entity if:

Not in this case, as rental property is reported on the personal 1040 tax return on SCH E.

A 1065 partnership return needs to be completed. Then each partner will be issued a K-1 by the partnership. each partner will enter their K-1 on the 1040 personal tax return. The information from that K-1 which pertains to the rental property will end up on page 2 of the SCH E. It does not matter that the partners are married and filing joint. Each partner will enter their respective K-1 on the joint return.

[Anonymous_]

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@Divamom82 wrote:

But it will still need to be reported on the personal under a schedule E correct.

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Do you or do you not live in a community property state and, if you do, hold your interests in the LLC as community property?