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$150k Rental Deduction Exclusion

Having a dispute with a tenant or landlord? Rental Law discussion

$150k Rental Deduction Exclusion

Postby Chanti » Wed Nov 30, 2016 7:52 am

s About Taxes)/$150K Rental Deduction Exclusion Advertisement Expert: Richard Fritzler - 5/20/2006 Richard,

I'm considering purchasing a home or condo(@$160K value)to rent to a family member in another state primarily for tax deductions and some limited personal use. We have over $150K adjusted gross income however and I was just informed that I won't be able to take any deductions. I was also told separately that if I set-up an LLC I may be able to take deductions under the llc. I'm not sure what to believe. Is there a way to take deductions, not deferred, on the property?
Chanti
 
Posts: 58
Joined: Tue Jan 14, 2014 9:38 am

$150k Rental Deduction Exclusion

Postby Verdell » Wed Nov 30, 2016 4:43 pm

Your $160k income pushes you into "phaseout" of deductions so you strat losing personal deductions including home mortgage interest, dependents, even standard and itemized deductions.

The LLC is a "disregarded entity" for tax purposes. the IRS does not recognize it nor do they have a tax return for it. It would provide no tax difference than not using an LLC.

Any passthrough entity would put the money back on your personal tax return, so whether it was a limited partnership, sub-S corp, or other, you would still be dealing with the 1040 demons.

Not knowing the source of your adjusted gross income, I can't give you the perfect answer.

So let me go through some details so you are better informed, and if you have more questions, you can call me at 800 590-6612.

People are encouraged to look for deductions because they make too much income. But buying real estate and becoming a nightime plumber and weekend gardener, just so they can save some money on their taxes is not a great solution.

As I have explained to my clients many times over the years, if all you want is a deduction, there are far better ways to do than buying into a property for rental purposes. Having to find tenants, then dealing with them then trying to get rid of them just to start all over again, along with having to repair water heaters, stoves, furnaces and air conditioners. AND you can't get paid to do that work. If you want a deduction, the ability to pay lower taxes, you have two better option.

One: just write me a check for business consulting, it is complete deductible and you don't have to get dirty. You can write the check for a much of a deduction as you wish.

Two: earn less. That may also seem silly, but for a business owner, it is quite smart. for a successful business owner, it makes sense to do that business as a real corporation, far lower taxes, better handling of deductions and writeoffs. Real Corporations don't have "Phaseout". Or the AMT(Alternative Minimum Tax). Operating as a real corporation, allows the individual to earn less, reducing the personal tax rates, taking advantage of all the personal deductions, and simplifying the 1040 drastically.

If you are not in business, reconsider! you're planning on being in the rental business. You are in business. If you have a stock portfolio, then you are in business. If you just had an interest bearing savinga account, you're in business, maybe not very successful but still in business. If you ran that business as ALL of the most successful business in that industry do, you would be a real corporation. hmmm.

Call me and we'll talk about your situation, and how you can get far better tax advantages. If you want to buy a condo for your relatives you might as well, do it in the best way possible.

Richard Fritzler

www.owelesstax.com

phone 800 590-6612
Verdell
 
Posts: 53
Joined: Sun Jan 05, 2014 9:56 am

$150k Rental Deduction Exclusion

Postby Nevada » Thu Dec 01, 2016 6:30 am

s About Taxes)/$150K Rental Deduction Exclusion Advertisement Expert: Richard Fritzler - 5/20/2006 Richard,

I'm considering purchasing a home or condo(@$160K value)to rent to a family member in another state primarily for tax deductions and some limited personal use. We have over $150K adjusted gross income however and I was just informed that I won't be able to take any deductions. I was also told separately that if I set-up an LLC I may be able to take deductions under the llc. I'm not sure what to believe. Is there a way to take deductions, not deferred, on the property?
Nevada
 
Posts: 39
Joined: Mon Feb 24, 2014 7:12 am


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