All Forum Posts by: Aviv Peretz

@Aviv Peretz

Buying a property, with or without an entity, is not a "business expense" for tax purposes.

A better question would be: can I offset my income as a GC generated via an S-corp with my losses as a landlord generated via an LLC? It's a yes, but a lot of complications along the way.

4 steps:

1. You earn money as a general contractor
2. You take this money out of your S-corp as a W2 salary plus as K1 distributions
3. You contribute this money into your LLC
4. Your LLC buys properties

If these steps are not clear, then you definitely need to get an accountant on your team.

@Aviv Peretz

I definitely recommend speaking to an attorney and CPA on this. Disclaimer: I am not either a CPA or Attorney. Generally active income has tax advantages to run through an S Corp, or LLC with an S corp selection. It's highly advised not to own or purchase property that you plan on holding in an S Corp. If it's a flip that would be a different story.

There’s a few questions here.

First, a cleaner doesn’t need to have a business license in order to work for you, if that’s the type of license you’re referring to. There’s no license they need in order to make paying them legal, it’s just on them to get it.

You can pay them directly and then if you pay them over $600 a year, you need to issue them a 1099. The 1099 can be issued under their first name, or whatever name you make the check out to. You can file those on Efile Magic for like $5. Just have all your contractors fill out a W9 so you have their info on file when you file their 1099. And if you don’t file the 1099, there’s really no way the IRS would find out anyways though. A 1099 is just a tax filing that reports that that person received freelancer/contractor funds and reports the amount to the IRS so that the payee doesn’t skip out on paying taxes.

Then when it comes to hiring someone who does maintenance on your properties, you don’t need them to be licensed in anything particular as long as they aren’t doing super specialized services that require a type of general contractor license (pretty sure, but since you’re also the owner, this also may not matter). However, even if you do, so many landlords don’t hire licensed people anyways on their properties and the person who is unlicensed is way more likely to get in trouble than you. No one is checking anything here.

Same situation goes here with the 1099 above. You can pay them however much, and if over $600, you “should” issue a 1099.

You’re pretty much fine.