Discussion:Rental Real Estate under sub S Umbrella
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Davewright1010 (talk|edits) said: | 12 May 2006 |
| I currently cannot deduct my real estate losses due to the fact that my AGI in excess of $200k. Can I incorporate my rental real estate business as a Sub S and deduct my rental real estate losses via Schedule E - line 28 ? | |
Mtmckeecpa (talk|edits) said: | 12 May 2006 |
| Dave,
No. Even if you could, an S corp, generally, is not vehicle of choice...more than likely an SMLLC (single member LLC)is your best choice. | |
| 12 May 2006 | |
| Very bad idea Dave. If an accountant suggested that, we'd take him out and shoot him. You'd rue the day that you put real estate inside a corp. Besides, it wouldn't change the character of the loss, still passive, still suspended. Raise the rent... | |
Davewright1010 (talk|edits) said: | 12 May 2006 |
| Why is it a bad idea to put real estate inside a corp ? .. or why can't real estate be put in a corporate shell ?
Another question: The losses are a result of depreciation.. any other way for me to capture these losses ? (I guess I could stop working and reduce my AGI, eh ?) Does the basis of the real estate still get reduced as on schedule E I still have to depreciate and then when the loss is computed, it is not allowed ? | |
Davewright1010 (talk|edits) said: | 12 May 2006 |
| What is the advantage of SMLLC vs. S Corp ? | |
| 12 May 2006 | |
| The losses aren't lost, merely suspended, and will offset future profits, or other passive income, or hit when you sell. You will get full credit, as long as you're alive. To explain the horrors of RE in a corp, there are other threads here that speak of that in detail. | |
Davewright1010 (talk|edits) said: | 12 May 2006 |
| JR1 - so the depreciation continues and the basis continues to be reduced ? Any specific thread you can lead me as it relates to the horrors of real estate in a corp shell would be most appreciated. Thanks for your valuable advice JR ! | |
| 12 May 2006 | |
| Thank you Dennis, you are dependable! Dave, the LLC has the same protections as a corp, we do like them now for real estate, and there's no tax consequences for rolling it there, still reports on Sch. E as before. But it's only useful for protecting each piece of RE from the others and from you. Basis only is reduced to the extent that you're able to take the losses. Since you can't, the basis reduction would also be suspended until final disposition or other passive gains to offset. | |
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