Discussion:Best structure for owning rental real estate?

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Discussion Forum Index --> Basic Tax Questions --> Best structure for owning rental real estate?
Discussion Forum Index --> Tax Questions --> Best structure for owning rental real estate?

JDcpa (talk\|edits) said:	5 March 2008
For a single individual owner, would one be best to hold a commercial rental property as a single member LLC filing schedule C or is there a better structure or entity election that could be made?

Kevinh5 (talk\|edits) said:	5 March 2008
what makes you think they would use a C for such an LLC?

JDcpa (talk\|edits) said:	5 March 2008
I am under the impression that for a single member LLC the default classification is disregarded filing on schedule C. Is this incorrect?

Kevinh5 (talk\|edits) said:	5 March 2008
yes that is incorrect

JDcpa (talk\|edits) said:	5 March 2008
thanks for such helpful and insightful replies

Kevinh5 (talk\|edits) said:	5 March 2008
"disregarded" means "ignore the fact that it is an LLC, what form is required for this activity?"

JDcpa (talk\|edits) said:	5 March 2008
okay, fair enough, so back to the question, is this the best entity classification for owning commercial rental real estate for a single individual owner?

Kevinh5 (talk\|edits) said:	5 March 2008
in Georgia, I'd say YES

JDcpa (talk\|edits) said:	5 March 2008
thank you

JR1 (talk\|edits) said:	March 5, 2008
E

Kevinh5 (talk\|edits) said:	5 March 2008
you're welcome. I was typing the full reply while you thought I had finished earlier.

Jdugancpa (talk\|edits) said:	5 March 2008
JR's favorite for real estate it the C corp, isn't it? :)

JDcpa (talk\|edits) said:	5 March 2008
Okay, sorry. A follow up question on this-where on Sched E do you identify the ownership being that of the LLC since it shows the taxpayer name and SSN on Sched E?

Kevinh5 (talk\|edits) said:	5 March 2008
either that or checking the box for stupid kittens

Kevinh5 (talk\|edits) said:	5 March 2008
address of property: 123 Main St, LLC instead of 123 Main St, Decatur

Newtaxguy (talk\|edits) said:	March 5, 2008
So then is there any tax benefit to having a rental property owned by an LLC?

Kevinh5 (talk\|edits) said:	5 March 2008
None, it is done for liability purposes only.

Newtaxguy (talk\|edits) said:	March 5, 2008
That's what I figured. So is there an option for a taxpayer whose income exceeds the threshhold for taking schedule E losses? That is, is there any way to structure ownership so that the losses can be taken?

JR1 (talk\|edits) said:	March 5, 2008
Earn less overall, turn a profit on the rental, or wait. Those are the options.

Kevinh5 (talk\|edits) said:	5 March 2008
real estate professional

Kevinh5 (talk\|edits) said:	5 March 2008
(OMGosh, then it goes on C?!?!?!)

Kevinh5 (talk\|edits) said:	5 March 2008
JR, I have to apologize, I thought "E" was your comment. Now I know that you were referring to the form. LOL

RoyDaleOne (talk\|edits) said:	6 March 2008
Sometimes, such as for Kevin and his office building I would recommend owning the building in the same entity that uses the space. I only do this if the liability is very low, good liability insurance, knowledgeable client, and saving the 7% sales tax on commercial rentals here in Florida is worth the effect.