Deductions for an investment with and without LLC?

Question

I am converting my primary residence to an investment property and understand the benefits of putting it in an LLC from an asset protection standpoint. I do already have a large umbrella policy. I'm interested in understanding how investor DEDUCTIONS may be handled differently on my tax return with and without an LLC? I believe I can deduct Mortgage interest, taxes, HOA fees, maintenance etc. plus depreciation, (which I don't have a handle on yet).

My goal is to minimize taxes but more importantly KEEP MY AGI LOW as possible (for non-real estate reasons). Can anyone shed light on how running the numbers through a "business" like an LLC or S-Corp will change my tax return? For example I heard that healthcare might be a deductible expense for a sole proprietor/president of a business. Thanks for any insight!

Basit Siddiqi · Answer

Account ClosedHaving an LLC/S-corp does not change the income tax deductions you are entitled to having.If you have an LLC and it is a multi-member LLC, there is a partnership return filing requirement.If you have an S-corp, there is an S-corp tax return filing requirement.You should speak with a CPA to engage proper next steps.Good luck in your search.

Account Closed · Answer

@Jon Reed That's helpful, thanks. I have an S-Corp but was told that LLC's are standard in RE and what is usually used.I believe health insurance premiums can be deducted from an S-Corp, but not sure about an LLC? This is an important factor to me.

Jon Reed · Answer

So... I am not tax professional but an LLC doesn't give any real tax advantage, it is just there for liability protection. You can take the same expenses for the property personally as you would if it was in an LLC.

Now, S-Corps are a whole different ball game and you should talk with a trusted tax professional and accounting professional about your personal cost/benefits to using an LLC vs and S-Corp.