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Old 05-27-2013, 06:23 PM
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apartment complex tax question

If a person owns a 4 to 10 unit apartment complex and generates income from rent. But does not have a job, no taxable income, no tax liability or deductions to itemize, or pay taxes (no w-2) is there anything other than yearly property taxes (6%) that they would have to pay? Do they have to file taxes (they don’t work here but is the owner)? Can this property be put into a llc? Or is a llc only for people who file income taxes?



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Old 05-28-2013, 06:44 PM
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Originally Posted by brian View Post
#1:If a person owns a 4 to 10 unit apartment complex and generates income from rent. But does not have a job, no taxable income, no tax liability or deductions to itemize, or pay taxes (no w-2) is there anything other than yearly property taxes (6%) that they would have to pay?

#2;Do they have to file taxes (they don’t work here but is the owner)?

#3: Can this property be put into a llc? Or is a llc only for people who file income taxes?
#1:The person needs to report his/her rental income on Sch E of 1040. (even if he/she does not need to file Sch C/Sch SE UNLESS he /she has self employment income that needs to be figured on Form 1040, Sch SE). So, he.she must pay tax to the IRS on yhis/her rental income. As he/she receives taxable income from the rental of a dwelling unit, such as a house or an apartment, there are also certain expenses that he/she may deduct on his/her tax return. These tax deductible expenses may include interest, tax, casualty losses, maintenance, utilities and depreciation. The tax deductible expenses reduce the amount of rental income that is taxed on his/her tax return. He/she will generally report such taxable income and expenses on Form 1040, Sch E and 1040 line 17 as part of his/her gross income reported on 1040 line 17


#2:As mentioned above; it depends whether or not they have taxable rental income to be reported to the IRS. They must file a federal income tax return if their income is above a certain level; which varies depending on their filing status, age and the type of income they receive.




#3: Investors can buy apartments, commercial property or even single homes to then rent out to tenants. While these properties can produce cash flow, they can also leave the owner with personal liability for the business. Putting your rental properties into an LLC will limit your personal liability with a very small initial setup cost. They may choose an available LLC name in their state. When forming an LLC for their rental properties, they need to pick a unique name that no other company is using as this name will appear on all of their documents and banking information. Theny can find an online LLC vendor or contact an attorney. They can work with an attorney one-on-one or form their rental property LLC online by themselves. They'll need to supply some basic information such as business address and the names and contact information of the owners, and then they need to pick statutory agent and pay their filing fees. Every LLC needs a registered agent on file with the state, who will be the person to receive legal correspondence on behalf of the company. When applying for an LLC for their rental property, most states charge a fee that must be paid at the time of filing. They then start operating teir rental property under the LLC. The next time they take on a tenant, change all of their rental property forms and contracts to the name of their LLC instead of their personal name. Henceforward, the rental property LLC will be liable for those contracts and they personally will have limited liability.They also need to start a bank account for their LLC. The LLC is its own entity, so it can open a business checking account to receive the rental income, pay the rental property expenses and debt service and pay profits to them as the owner.



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