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Old 04-04-2016, 11:18 AM
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Am I limited on rental loss with multiple rental properties?

Went to a well-known tax chain here in Virginia, VA USA.

I have three properties in two states. My rent just barely covers the HOA fees, mortgage and taxes. Random repair costs eat away any profit and I have a loss each year.

This year, we filed with the state as an LLC with intent to roll up all the properties under one entity for tax purposes.

Between my wife and myself, our fulltime jobs are over $150K

This year, I seem to suddenly get hit with $8,000.00 more in taxes. (total Fed tax is $12,700) The preparer (a new guy) says that
- this is from my income on three rental properties
- We can only deduct expenses on one property.
- We need to put in 900 hours of work to get more deductions as a real estate professional.

For three properties combined
Combined rent collected Annually is $60,000
Mortgage and Taxes is $38,400.00
HOA Fees annually is $18,300
Repairs and maintenance $3,000.00
$700 annual for property insurance
I travel 2200 miles annually to manage the properties and make repairs. $1210 mileage reimbursement
$1800 spent on hotels and meals travelling to property 220 miles away.
LLC filing fee is $175

Does this sound right? $8000 more in tax due to "rental income" sounds steep.
I suspect he missed something. It appears he is only filling all this under my personal income tax. I thought he would be filing this as an S-Corp or something? He says the LLC only protects me from lawsuit and there is no tax benefit for filing.

I have a fulltime job, but I spend a lot of time responding to tenant requests, managing HOA demands, collecting rent, researching How-To and performing repairs myself,

Does anyone have any thoughts or tips?

We have not yet finalized because we received $300 dividend income from a stock and he says we need the company's EIN number and won't continue until we get him that information. We think this is wrong as we never needed an Employer ID number for a stock!

When we see him again, we're going to ask the office manager to check the numbers on his work.



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Old 04-04-2016, 04:42 PM
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Join Date: Oct 2010
Posts: 4,892
Went to a well-known tax chain here in Virginia, VA USA.

I have three properties in two states. My rent just barely covers the HOA fees, mortgage and taxes. Random repair costs eat away any profit and I have a loss each year.

This year, we filed with the state as an LLC with intent to roll up all the properties under one entity for tax purposes.

Between my wife and myself, our fulltime jobs are over $150K

This year, I seem to suddenly get hit with $8,000.00 more in taxes. (total Fed tax is $12,700) The preparer (a new guy) says that
- this is from my income on three rental properties
- We can only deduct expenses on one property.
- We need to put in 900 hours of work to get more deductions as a real estate professional.====> Your rental property needs to be reported on Sch E of 1040, not on Sch C of 1040 even if the property is owned by an LLC/ you are real esate professional.however, as landlords owning your properties through business entities, you don?t use ?individual Sch Es of 1040 to report your rental income / losses unless YOUR llc IS one owner SMLLC. Instead, your LLC , I man as an MMLLC, files IRS Form 8825, to report the income / deductions from the rental property owned by the LLC and is reported on form 1065 Sch K line 2, SCh K1 of 1065 line2 of part 3 , and on f1040 line 17 as part of your gross income on form 1040.

Aslongas your LLC is a single member LLC or have more than one member. A husband and wife can be treated as one taxpayer for this purpose.
The income and deductions for your rental property in a SMLLC are reported at Part I of Sch E of 1040 NOT on form 8825, as if owned personally by you. So,.?
The income and deductions for your SM LLC is reported on your 1040 not on form 8825, Form1065 SCh K/ K-1 and on form 1040 line 17 as part of your gross income and is taxed at your marginal tax rate. In this casae, your rental income isn?t subject to self-employment tax.


For three properties combined
Combined rent collected Annually is $60,000
Mortgage and Taxes is $38,400.00
HOA Fees annually is $18,300
Repairs and maintenance $3,000.00
$700 annual for property insurance
I travel 2200 miles annually to manage the properties and make repairs. $1210 mileage reimbursement
$1800 spent on hotels and meals travelling to property 220 miles away.
LLC filing fee is $175===>You also may claim annual depreciation expenses on each rental pty too.



Does this sound right? $8000 more in tax due to "rental income" sounds steep.
I suspect he missed something. It appears he is only filling all this under my personal income tax. I thought he would be filing this as an S-Corp or something? ==>I do not think the agent filed your LLC return as an S corp return. S corp / LLC use deffrent tax filing forms. No unless he filed form 1120S, he filed your LLC return by filing form 1065, NOT form 1120S as you said your biz form is a LLC using either Sch E of 1040 or Form 8825 as said above.

He says the LLC only protects me from lawsuit and there is no tax benefit for filing.=======>>agreed;as you own rental property, your rental income is not subject to self employment tax. however, your rental income is reported on your personal return on 1040 regardless of your business form.


I have a fulltime job, but I spend a lot of time responding to tenant requests, managing HOA demands, collecting rent, researching How-To and performing repairs myself,

Does anyone have any thoughts or tips? =======> since you have high income, AGI/taxable income and high tax liability;REMEMEBR; YOUR Rental income is treated like most regular income and is taxed at your marginal tax rate. So as you have high income and high aagi/taxable income then your TAx liability onyour rental INCOME WILL ALSO ICNREASE..

We have not yet finalized because we received $300 dividend income from a stock and he says we need the company's EIN number and won't continue until we get him that information. We think this is wrong as we never needed an Employer ID number for a stock!==>Some
H&R Block customers are upset after what they are calling "a mess by the company." but I would suggest either seeing a CPA doing taxes/ EA next year


When we see him again, we're going to ask the office manager to check the numbers on his work
===>You may do that if you want.or you may contact an enrolled agent or a CPA doing taxes in your local area for more professional help.



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