All Forum Posts by: Account Closed

Your expenses on the property will be a matter of fact - the legal ownership of that entity won’t really matter from the perspective of what you can write off. The thought that forming an LLC to hold the property will give you some big tax advantage over owning it personally is simply not valid.

I don’t think I would do that. You are going to end up converting rental income that’s not subject to Self Employment tax into business income from the management company that is subject to self employment tax. If you have some other non-tax reasons for doing this go for it but probably will cost you some tax

This is a pretty common issue that some firms seem to have figured out and others don’t - I think it’s more person by person. You find at some firms the staff have a lot of autonomy to prep and review returns with little or no review from the partners in the firm. There is a fine line here - the partner who you are paying the big bucks for should have a handle on and look at everything - if not what are you paying for? The fact of the matter is they usually never get called on it because 99% of clients don’t look at their returns - kudos to you for reviewing them. We are really good at review - we typically have internal accounting departments at our clients looking at our work and other big 4 firms looking at our work (sometimes the partners in the deal are big pension funds and institutional investors who all seem to use big 4). I think you have to find someone else - sounds like you are at a firm where the partner isn’t properly overseeing your account.

I am from Atlanta born and raised - grew up in Kennesaw. It’s changed so much over the years. Marietta and Kennesaw are still affordable and enough demand that if you have a nice property it will sell fast. You are going to see Emerson and Cartersville blow up over the next 10 years because of the Northwest Cooridor project opening 2 more lanes up (toll lanes) going south to Atlanta in the morning. I’d look at zips like 30144, 30152 (Kennesaw), 30066, 30067, 30068 (Marietta) 30102, 30101 (Acworth). I also like Dallas, GA where I live a lot - it’s growing like crazy and nobody seems to know it (new construction and flipping all over the place out here).

You mentioned you thought with Hard Money the property is the only security. With all Hard Money loans I’ve seen the borrower has a personal guarantee. I do also see non-recourse frequently (no personal guarantee) but only on very large commercial deals and even then only a portion of those notes are non-recourse most of the time.

If you still own the property in VA I’d recommend you leave it in the VA LLC. Start a new LLC for your TN properties. I’d probably do one LLC for all your TN properties that you end up buying. If not you will need to file multiple TN returns (TN will require a return for each LLC). What are you looking to do long term?

One big reason I don’t recommend that my clients own real estate inside an s Corp is it’s just really hard to get it out of the S Corp. It’s all good now but in 5 years if you need it out of the s corp for some reason (absent a sale) the property is deemed sold at fair market value. With an LLC taxed as a partnership you don’t have that issue. Think of the S Corp like being married - hard to get out of. Think of the partnership like dating - easy to start and easy to get out of.

If the Republican tax plan passes the state income tax deduction will likely be limited or lost altogether. Accordingly, if you anticipate a large state balance due for tax year 2017 you may want to consider paying that by year end if you are not in alternative minimum tax to preserve your deduction. If you use transferable credits to pay your state tax (film credits in Georgia) think about funding those before the end of 2017 to preserve your state income tax deduction.

Just create and LLC and elect S Corp status with the IRS for tax filing. You will be an LLC that files as an S Corp

I work with a big syndicator of hotel properties (they have like 50 properties or something crazy like that at any given time). I’d be glad to put you in touch - I’m sure you are going to have more help as you grow. Wouldn’t mind putting an experienced investor with growth potential in touch.