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  #1  
Old 01-10-2008, 02:10 PM
maijazi maijazi is offline
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Default Investement Property Question

We bought a investment property in 2006. It was a new townhouse, which we are renting.


We found out later that due to our high income tax bracket, we can not claim the deductions of mortgage payments and depreciation of the building until we sell it. We do not have any plan to sell it and in current market it is not wise either.

Can we make an LCC and transfer that house to that LLC and run it like a business?
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  #2  
Old 01-10-2008, 06:28 PM
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GarySpicuzza GarySpicuzza is offline
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Default Re: Investement Property Question

Quote:
We found out later that due to our high income tax bracket, we can not claim the deductions of mortgage payments and depreciation of the building until we sell it.
Hmmmmmm.....I don't know if that is exactly accurate.

Without researching my tax books I believe you are confusing and or mixing "passive" loss deductions with someone who is actively managing rental property for profit.

I'm not aware of anything that prevents one from claiming expenses against rental income. But I am aware there are rules for their rules regarding claiming "passive losses" where you ARE NOT actively engaged in the rental activity or own less then 5% of the property or something to that effect.

You may be correct....

I could be wrong...

but I don't think so.

Click THIS LINK.

Quote:
Generally, cash or the fair market value of property you receive for the use of real estate or personal property is taxable to you as rental income. You can generally deduct expenses of renting property from your rental income. Income and expenses related to real estate rentals are usually reported on Form 1040, Schedule E (PDF). Income and expenses related to personal property rentals are reported on Form 1040, Schedule C (PDF) or Form 1040, Schedule C-EZ (PDF) if you are in the business of renting personal property as a sole proprietor.
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  #3  
Old 01-11-2008, 01:42 PM
vanman2099 vanman2099 is offline
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Default Re: Investement Property Question

There should be nothing preventing you from deducting the interest on the mortgage / taxes on the property / depreciation of the unit / and maintenance or repairs to the property against the income you received from the rental unit.

The deductions come into play before you even start to calculate your overall deductions on ur taxes, ie, if you brought in 10,000 this year in rental income only so much of that would be taxable after you deduct all of the above things you would then add the taxable income to your other taxable income. Technically each house is its own business.

If you formed an LLC you would have to use a "quick-claim deed" to transfer the property to your LLC, but if your bank or mortgage holder found out about it they can demand full payment for the remainder of the mortgage on the spot; on top of that, it's not considered a very legitimate practice.

The only thing I heard of for what you're saying is there is a CAP on how much you can deduct from your income for mortgage interest, etc, and the reason they capped that was because people who made a ton of money were going out and buying the biggest houses possible and deducting a substantial amount of income from being taxable, but I think it's a very high amount, somewhere over 250,000, but I'm not sure.

But this shouldn't apply to you because you wouldn't be claiming the rental property as your primary residence and deducting the interest against your ordinary income.
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Old 01-13-2008, 11:14 AM
gasonline gasonline is offline
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Default Re: Investement Property Question

Yes you can do
but there is some document work which is to be done
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Old 01-16-2008, 12:19 AM
Landwatch.com Landwatch.com is offline
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Default Re: Investement Property Question

Much ado about nothing, that's how the whole thing looks like. Even if you somehow managed to do this still if you are caught, then the bank won't be so happy about it. Besides, you can be sued.
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  #6  
Old 05-26-2008, 01:01 AM
sahilmiddha sahilmiddha is offline
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Default Re: Investement Property Question

i think you can do but there are some legal formalties, which is to be done.
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  #7  
Old 05-26-2008, 02:09 PM
spencer24 spencer24 is offline
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Default Re: Investement Property Question

If I were you, I would ask my accountant what is the best way to handle this situation.
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  #8  
Old 12-30-2010, 07:04 AM
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saramartin saramartin is offline
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Default Re: Investement Property Question

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  #9  
Old 12-31-2010, 12:40 AM
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krantcents krantcents is offline
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Default Re: Investement Property Question

Quote:
Originally Posted by maijazi View Post
We bought a investment property in 2006. It was a new townhouse, which we are renting.


We found out later that due to our high income tax bracket, we can not claim the deductions of mortgage payments and depreciation of the building until we sell it. We do not have any plan to sell it and in current market it is not wise either.

Can we make an LCC and transfer that house to that LLC and run it like a business?
I agree with Gary, treat it like income property. Report the income and take all the deductions including depreciation. When you sell transfer the proceeds into another income property and defer the taxes.
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  #10  
Old 04-27-2011, 09:41 AM
lerrygibson lerrygibson is offline
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Default Re: Investement Property Question

Well, if we look closely then there are many issues in making investments and it will be actually required to understand in which property we are making investments that will be worth in making gains effectively.
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  #11  
Old 04-27-2011, 12:22 PM
littleroc littleroc is offline
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Default Re: Investement Property Question

Shouldn't the property be in an LLC anyway if your renting it? What if you get sued?
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Old 05-24-2011, 09:14 AM
lerrygibson lerrygibson is offline
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Default Re: Investement Property Question

The question is right and it is necessary for us knowing the best one can do to get over such problem and to even get it resolve.
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  #13  
Old 08-04-2011, 01:33 AM
jackgwd jackgwd is offline
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Default Re: Investement Property Question

Yes, You can run LCC as a business.
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