All Forum Posts by: Mike Beall

@Linda, this is why I am asking questions. I haven't done anything with the scorp and can just file everything personally, if that is what you are saying. Yes, I understand capital expenses are depreciated, I was speaking loosely. Sorry to muddy the waters.

Everyone, Thanks for the replies. I've been out of touch over Christmas. First, I am NOT holding the properties in the scorp. These are all personally owned (mortgaged). The duplex that is our primary residence is mortgaged as a primary residence and we live in one apartment. Basically, everything has been run personally and I want to run it as a business. 

For 2020,  sort out payroll & distributions before year end to maximize tax benefits and minimize taxes. Since the mortgages are held and paid personally, I would deduct things like mortgage interest and property taxes personally and through the scorp add the rental income, deduct capital, rental and utility expenses, salary, and distributions, correct?

Thanks.

I have read several articles here about the benefits of scorp vs llc and I'm going to work towards a series llc to hold the properties in 2021. In early 2020, I started a multi-member LLC (2 members) and elected scorp status. I have some questions about best tax strategy to minimize taxes for 2020. I have 6 properties (single family homes and duplexes) that bring in about $90,000 gross rent / year. My wife and I live in one apartment of one of the duplexes. Currently, I am running everything through my personal account (working on getting business account setup and accounting software) and mortgages/expenses are paid through that account as well. My questions are:

- My wife is property manager. Should I pay her a salary? I will have to pay payroll taxes on this money but it reduces the income tax-wise in the scorp. 

- With only $90k in income, can I get away with only doing distributions to the two members (wife and I) or is that a red flag (I know it is not recommended but it should be a small portion of the income after expenses)? It is a Virginia LLC. If I need to pay salary as well, what is reasonable?

- I have plenty of capital & rental expenses, and mortgage interest in 2020, so that will definitely offset the rental income but what is the best strategy to minimize tax impact here?

Thanks,

MikeB