All Forum Posts by: Tanner Bellamy

Hi @Selina Giarla,

Wow a lot going on here. With that many properties, a holding company might be an advantage for you. Not necessarily for tax purposes, but for asset protection purposes. You do not want your rental properties taxed at a corporate rate. 

You probably want to keep the management company separate from the rental properties. Generally, you want to keep passive and non-passive separate. The management company would be considered a non-passive business. 

There are a lot of tax professionals specializing in real estate that can help you that are active in this forum. I would reach out to one and see if they can help you. I would venture to say that a few hundred dollars for some advice could save you thousands. 

Hi Dennis, I think you have come to the right place. There are over a dozen tax professionals active in this forum that are still taking on new clients. If you are looking for someone I would start by checking for professionals that are active, maybe strike up a conversation, and then reach out personally by direct message to see if they are taking on new clients. 

Also, if you want to expand your options, maybe move your post over to the "Finance, Tax, & Legal" forum where most of the tax professionals are active in. 

Best of luck!

Hey Ryan,

First off, I do recommend sitting down with a tax professional so that they can understand your specific set of facts and circumstances. 

That said, typically you want to keep your passive and non-passive income separate. Your non-passive income is subject to Self Employment (SE) tax and passive income is not. That is why your landscape company is structured as an S corp... to lower the amount of SE tax you have to pay. I would recommend an S corp for fix and flips generally... but again depends on your facts and circumstances.

For real estate investments, generally, you want them in LLC's. Not for tax preferences, but for legal reasons. Real estate/passive investments are already preferential when it comes to taxes since they usually show a loss on paper and the income is not subject to SE tax.

You are in a great situation for some tax planning. I would wager that if you haven't sat down and done a tax plan before, spending a few hundred dollars with a tax pro could save you tens of thousands in the long run. 

Good luck!

 Yep

From a tax perspective, having two members in an LLC will generally cause you to file a partnership tax return which is typically more expensive than if you were to go SMLLC route. Which would make the LLC disregarded and the property would go on your individual tax return on Schedule E. Something to consider. I will leave the liability questions to the attorneys.

 That sounds like a great plan to me. You will eventually want your nonpassive income to be flown through an S corp so you can lower the amount you pay into self employment tax. That said, there is a break even point to determine that and I do not know your financial situation now. But, assuming this is your main source of income, generally, I like S corp here. 

 Good to hear Dane!

 Hey Dane, your depreciable basis in the property is the lower of your cost, including improvements, and fair market value on the date of conversion to rental use. In this case, I would give him the full $368k. Do not take the land out yourself because he will probably end up doing it too which will result in your having a lower depreciable basis than you should have. 

I like your idea of holding the property. If you ever need the equity you can borrow against it tax free. Don't forget that!

Good luck!

 I would try to look for a pro. This website is a good place to start. Most firms are starting to ramp up again this time of year so it may be hard, but I know that there are people out there that still need business. I would reach out to tax pros here in the forum that are sharing value.

 Hey John, just putting my two cents in here for what its worth. I would think you could assume that your HRB guy knows what he is talking about since he owns multiple properties. However, you can never be sure without asking. I would strike up a conversation with him and see what he thinks. If he is in fact well versed on the tax side of the real estate world, tell him he needs to find a better paying job! Maybe he should become a tax pro on the BiggerPockets website and start sharing his expertise if thats the case!