All Forum Posts by: Mizael Quinones

Originally posted by @Ashish Acharya:

Originally posted by @Mizael Quinones:

Hello, BP

My wife and I decided to place our then primary residence for rent in Nov/Dec '19. Its our only rental property. We did not file for LLC or anything like that. Is it necessary to file under qualified joint venture? Any tax benefits? We both have regular full time jobs. We're in Texas.

Just want to make sure I understand before I tell uncle sam

Thanks

 You don’t have to treat your venture as QJV. You are in the community law state. 

You can treat the venture as a disregarded entity.

PerRev. Proc. 2002-69 and 2002 C.B. 831, a husband and wife who are the sole owners of an LLC and reside in a community property state can choose whether they are treated as a partnership or disregarded entity. In either case, since the husband and wife are joint owners of the LLC, tax information related to the LLC can be discussed with either spouse.

Where spouses are the only owners of an unincorporated business entity and hold their interests as community property under state law, they may choose between partnership or DE status. The community property exception does not

1. require that the operations rise to the level of a trade or business or
2. that either spouse materially participate in the operations.

It also applies if the spouses establish a separate entity such as a limited liability company (LLC).

In community state, husband/wife LLC can own Primary residence and elect to be classified as DE, and qualify for section 121

@Ashish Acharya, greatly appreciate the detailed response! Gives me a huge piece of mind moving forward. Thank you greatly for your time in creating that response.

Originally posted by @Jaysen Medhurst:

Don't have to move title into a LLC, @Mizael Quinones. Worth considering if you continue to acquire properties. You may want to see about an umbrella insurance policy. No need to "file" anything at the moment. Talk with your CPA about how this will be reported on your 2019 taxes. There are no tax benefits to holding this in a LLC.

Most importantly, did you do a full rental analysis on your home? Are you very sure that it's going to be a good rental property. If you home value is over ~$150k and/or you're not hitting the 1% rule, it's probably not a good rental.

 @Jaysen Medhurst, Thank you very much for the clarification and advice. We were very fortunate to speak to a few good resources before setting up our home as a rental and thankfully the numbers support as much. With that being said, following the advice on here has helped us tremendously on setting up the rental and most importantly, find good tenants. its been 2 whole months and I'm happy to report that the tenants have been great. Payments on time, inspections have turned out well, etc.

Now that its tax season though, its definitely a different beast! Going to a CPA will absolutely be done, but I wanted to make sure I at least understood what would be going on by pre planning and going through a free tax service to see what to expect and what questions to ask. So again, thank you sir for the reply!

I agree, with it being our only rental property, we didn't see the need to establish an LLC (although we do have a landlord/umbrella policy in place). So it makes sense not to have to establish a QJV at the moment, I suppose.

Hello, BP

My wife and I decided to place our then primary residence for rent in Nov/Dec '19. Its our only rental property. We did not file for LLC or anything like that. Is it necessary to file under qualified joint venture? Any tax benefits? We both have regular full time jobs. We're in Texas.

Just want to make sure I understand before I tell uncle sam

Thanks

Jon, thank you very much for that advice. Believe it or not that was actually my preference. We had heard some advice that by announcing the home for rent we could gauge the interest and gather info on what sites attracted more attention. Not sure on your thoughts on this. Anyways, placing it for rent before we were ready did make the process feel very awkward for me and what your saying makes simple sense. Thank you again!

Hello BP,

My wife and I are in the process of renting out primary residence and purchasing a new home (which will be our primary residence). We have obtained approval and have been searching for our next house and have placed our current home up for rent. I'm looking for advice/suggestions as to how to manage potential renters concerning move in dates. We have gotten a lot of interest/inquiries but haven't replied. Ultimately, I realize the goal is to have no vacancy from the time we buy and move out to the time a new renter comes in. Obviously this our first time doing this so any help is greatly appreciated. Located in North Dallas, Tx