Bealeton, VA · Member since 2016 · 52 posts · 14 votes
Hello BP rental investors,
I have an LLC with a Residential Building Construction Class A license. I purchased a rental property under my personal name so that it would be easier to refinance. I want to be the General Contractor for the renovation on the rental property. Has anyone done this before? I suppose I will just have to write invoices to myself from my company and keep all necessary paperwork.
Thanks for any tips on doing this and any things I should look out for.
Investor · Topeka, KS · Member since 2015 · 1k+ posts · 1k+ votes
6y
You are a thinker, which is a good thing. In this case, I don't think you are getting much benefit. Whether you pay yourself from the LLC, increasing your income and lowering your LLC profit or not pay yourself, decreasing your income and increase the profit of the LLC, it will all flow through to your taxes as income either way.
For sure don't pay yourself if the payment would put the LLC into negative profit or would leave less profit that you have in depreciation expense. You want to have enough profit to take advantage of the MOST IMPORTANT benefit of real estate which is depreciation. As I type this I am second guessing myself on how the rules work around depreciation, but don't negate your ability to take full advantage of it.
Bealeton, VA · Member since 2016 · 52 posts · 14 votes
6y
Thanks, Jacob. I'll look into the benefits of depreciation. I forgot to mention that I would be getting tax credits for this rehab and I can only claim the tax credits if I pay a company to do the work (e.g. my company and subcontractors).