All Forum Posts by: Mikell Elliott

Mikell Elliott this strategy sounds like simply telling the IRS “I’m now tax exempt” and the IRS will simply tell you no.

Also for future references a LLC does very little if anything for tax purposes (assuming it's a single member LLC).

No tax advice given

That's not exempt, that's just reducing your withholding by boosting your deduction claim. Buying something and using that to reduce your taxable income can work if you do enough repairs on the property or have a high enough depreciation write-off without taking in any rental income. But if you start renting it out right away, without any repairs to deduct to wipe out the rent, you could end up owing *more* taxes and facing under-withholding penalties. 

If it were me, I would leave things as is, buy the property, and see where you end up. If the extra $300 per month is material, you're probably unprepared for investment property anyway. 

Assuming you get paid 24 times per year:

If your tax bill for the year is $4,800, then you're fine. The $200 you're having withheld covers it.

If your tax bill for the year is $10,000, then you're going to owe $5,200 plus a penalty for under withholding.