Can you pass through rental income loss using an LLC?

[Pratik Jhaveri]

Hi,

I'm in the process of closing on a MFH and am getting mixed advice from two CPAs (one of them is my current CPA). At this time we are going to take title as individuals as one of the units with be owner-occupied by my sister. Our lawyer has said a LLC will be overkill for this situation and will have additional overhead. The bank has said that they would charge a higher rate for an entity on title. Based on the advice on taxes though, we could change our decision

Appreciate the help.

Out of the two opinions below, which one is correct?

1. Current CPA says you can form an LLC and take any losses as a K1 loss on your personal taxes. I've not found anywhere on the internet where for eg a $50K loss on the property can be taken as K1 loss on personal income.
2. New CPA said you cannot take rental losses and pass them through to personal taxes even if you do an LLC.

[Stephen Chittenden]

In general, the character of the income is retained through the LLC. So, passive real estate losses reported on a K-1 remain subject to the passive loss limitations.