Maximizing tax write offs

[Eric Maury]

Hi guys,

Looking for some advice. Recently had an offer accepted on a 3 unit in Jersey City, NJ. It's my 2nd investment property, and I now have 5 units. When I talked to my accountant, she discussed putting my portfolio under an LLC umbrella so I can take full advantage of the tax breaks and depreciation. Right now, as it is, I'm against the wall on the depreciation cap but do want to take full advantage of write offs for both of my properties. However, when I talked to my lender, I found out that trying to put the entire thing in an LLC would throw a huge wrench in my plans and the banks wouldn't offer me the same type of loan or down payment. So here we are... trying to creatively problem solve.

Wondering if anyone has approached this conundrum in another way. Are there any loop holes where a Property Management LLC can write off some of the expenses during tax time. I'm not out here trying to screw Uncle Sam, but definitely want to see if anyone has dealt with this issue and get some perspective.

[Linda Weygant]

Your accountant may be confused.

There is no depreciation cap.  You depreciate up to your basis regardless of your entity type.

If you are a single member LLC, then literally nothing changes on your tax return. There isn't even a place on the Schedule E to put your LLC name or its EIN.

There are changes to your reporting format if you are a multi member LLC, but still no changes in what you can deduct or your overall taxation rates or structures.

Literally the ONLY difference you would have is that you can deduct the annual LLC Licensing Fee associated with your LLC as a business expense.