LLC Tax Savings for Land with Windmill Income

[Daniel Dunnigan]

Hi everyone! Looking for advice on how to save on taxes. Thanks for your help!!

Situation: Purchased a piece of land in NY this year with 3 people (Dad, Uncle, and I). We paid for the property by taking a HELOC on my dad's house and using the cash to pay for land in all cash. We pay ~$7,000 annually towards taxes on the property and paying off the HELOC. An energy company wants to pay us $7,000 a year to put a windmill up.

Goal: Put the land into an LLC so that we can offset the $7,000 in income by the $7,000 in HELOC and tax payments to effectively show $0 in net income. This would result in us not having to pay any personal income taxes on the $7,000 in windmill income.

Questions/Considerations: 

1) Can we take a rent expense for the LLC on the HELOC payments even though they are not in the LLC name?

2) If we did take this as rent expense, would my dad technically have to record that money as rental income even though its just automatically paying the HELOC?

Any suggestions/tips would be appreciated!

[Wayne Brooks]

An llc does not affect your ability to expense any items.