Establishing the wrong entity structure could possibly cost you thousands in LLC formation fees, taxes and potentially losing your portfolio. There is so much misguided information online about what is the best LLC structure for real estate investors. Let us help guide you in choosing the best LLC structure for your real estate investing business.
We file both your business and personal income tax returns so that we can ensure you save the most and minimize your tax liabilities. Throughout the year, we advise our clients on tax savings strategies such as home office deduction, cost segregation study, and REPS (real estate professional status). Our year-end tax planning sessions typically save clients thousands in tax dollars.
We assist our clients with their bookkeeping needs to help streamline their business, putting time and money back in their hands. Also, we offer monthly/quarterly financial reporting and Quickbooks Online training.
Enrolled agents (EAs) are America’s Tax Experts. EAs are the only federally licensed tax practitioners who specialize in taxation and also have unlimited rights to represent taxpayers before the IRS.
“Enrolled” means to be licensed to practice by the federal government, and “Agent” means authorized to appear in the place of the taxpayer at the IRS. Only enrolled agents, attorneys, and CPAs have unlimited rights to represent taxpayers before the IRS.
We highly recommend you form an LLC to invest in real estate. There are so many advantages such as asset protection and privacy. Best of all you could significantly reduce your tax liabilities by having the right entity structure in place.
The short answer is yes but it depends on the State in which you are investing in. For example, if I were investing in Tennessee I would recommend purchasing multiple properties under a single LLC since TN LLCs are subject to annual report fees. It wouldn’t be the most cost effective strategy if I formed a new LLC for every property acquired.
Mortgage interest, property taxes, insurance are a few examples of expenses that you can deduct against your rental income. Those examples are property related expenses but you may be able to take advantage of some general operating expense such as a home office deduction if your business is properly structured.
Depreciation is a major tax benefit for real estate investors. It is a tax deduction which allows investors to recapture their investment in a over the deemed useful life of the asset defined by the IRS. For residential rentals, the useful life is 27.5 years. What makes depreciation so wonderful is that the depreciation tax deduct doesn’t impact cash-flow but is used to offset rental income and generally creates a net rental operating loss
