New Business Tax Question
I have started my real estate business this year. I have one partner and it is an LLC. If I still work a regular job and do real estate am I able to take the regular business deductions?
For example can I still deduct capital expenses, deprication, and normal business realated expenses. Or am I not able to take these deductions because I earn less in the real estate business then my regular job?
Hi Again Investor NC: Yes, your LLC will show a profit or a loss. You will be able to take 50% (if you own 50% of your LLC) of this profit or loss and incorporate it into your personal return. If it is a loss, it will reduce your taxable income from your W2 job - which equates into a tax refund since your W2 job has been withholding year-round.
You will want to read the IRS publication 527 on rental property. http://www.irs.gov/publications/p527/ar02.html#d0e3102
The just of the article is that if you are married and you activly participate in the rental property, your share of the losses (up to $25K) can be deducted against your W2 income. This assumes that you and your wife have less than $100K in W2 income. If you and your wife make more than $125K in W2 income, you cannot deduct anything from the rental activity.
your bus. has deductions that stand on its on merit. your other job is completely seperate.......kenmax
Thanks for the link. The reasons I asked that question is that an accountant said I wasn't allowed to do that. (I don't think that accountant has done much in Real Estate) I will be looking for a better accountant.
Thanks again.
That accountant might have assumed that your loss from rental activity was a passive loss and in this case it would only be deductable if you had passive income (from stocks, etc.). The key, here, is are you actively involved in the running of your rental property? If so, a loss as a result can be deducted against your W2 income within the limits mentioned earlier.
That accountant might have assumed that your loss from rental activity was a passive loss and in this case it would only be deductable if you had passive income (from stocks, etc.). The key, here, is are you actively involved in the running of your rental property? If so, a loss as a result can be deducted against your W2 income within the limits mentioned earlier.