Jil
Sheriff
Who else?
Well, I guess…then…how about hanera ?
How stupid are CA voters going to be the next few years? I don’t plan to sell but will evaluate when the 1-year lease is up. I’m not thrilled about the prospect of having to create a California LLC and pay $800/yr to the state franchise tax board.
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As I told wuqijun in another thread, bought 1 SFH per year in Austin since 2013, closed just few weeks ago.
Other than $800, CPA fee, service agent fee, one-time set-up legal fee, keep proper minutes of meetings, etc.
Shouldn’t need minutes for a LLC, right? That’s an advantage of LLC vs. s-corp. It’s less paperwork. There is the setup fee. Do you need a registered agent in the state for LLC? This is adding up fast. All the expenses are deductive for the LLC, but it’s a pain.
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You are talking about setting up an LLC to hold your rental property and pay the 15% federal corporate tax instead? Is there a state corporate tax? I heard some bad ass CA assemblymen threatening to increase state corporate tax to offset federal tax cut.
I believe sheriff really planned this. He said it more than a year ago he was leaving for the border towns or so. I hope he goes to a good retirement life.
I know where to go, how to make $360K-$600K tax payment go down to $30K, $50K or in that range. I see they use LLCs, CRTs, CSDs, premium financing, you name the Cs, Rs, Ss to achieve that goal…
If you have a $1-$2M income a year, and want to cut short the payment to uncle Sam OK. They can help you. Lower amounts, are OK. And, no, no life insurance here though I can guide you tu use that money saved for your own policy. You save on this side, and on the other when you retire, tax free money, and with life benefits in case you get sick. 
If you plan to open LLC or S-Corp or Corp to hold rental, esp one or few rental homes, it is tough. You can not assign property with mortgage as lender and county will treat this as sale.
Just hold it as passive rental activity with positive cash flow, you will not most likely pay taxes due to depreciation 1/27.5th of your home (not land) value.
Just googled about Austin “The median home value in Austin is $316,800. Austin home values have gone up 7.4% over the past year and Zillow predicts they will rise 3.2% within the next year. The median list price per square foot in Austin is $211, which is higher than the Austin Metro average of $152”
For this range, you will get plenty of homes in bay area itself. What do you save or extra benefit by going Austin?
It depends on if those deductions vanish as part of the new tax code. My mortgage interest wouldn’t be enough to itemize with a $24k standard deduction. Would landlords still be allowed to deduct property tax when it’s no longer allowed for primary residence? I doubt it. Would the depreciation deduction stay? My goal with a LLC would be to deduct mortgage interest and property tax against the rent income while only paying 15% tax on profits. Then I’d take the $24k standard deduction on my personal taxes.
CA requires any business to pay at least $800/yr in income taxes.
I would think it would stay. It’s the cost of doing business.
First, Trump has provided his guidelines, but Congress needs to approve. This is a big question on removing deductions, esp state income taxes. It affects almost all states except 7 states with zero income taxes.
Rental is business side, not primary. If changes happens for rental, it also comes to corporate business. Property tax and depreciation is common to people like us and businesses. Changing depreciation tax is a nightmare work for businesses, say Apple, Google, Facebook, how much they spend on capital items and they claim depreciation ! It is too big a challenge for everyone and hard to reclassify.
Above all, if you have mortgage, it is illegal to transfer title to company name as “Due on Sale” Clause will be invoked by lender. By the way, how lender will come to know when we silently change the title from person name to business name? When companies sell MBS assets, or similar event happens, to another company MERS database is checked and lender will come to know and will send you notice ! True legal issue then.
That is why I am always skeptical about Trump’s move which is not properly backed up or supported congress, including from same rep party members !
CPA needs $500 minimum to file taxes !
Sorry this might be a dumb question, but you mean the property needs to be assigned to the LLC for it to be incorporated?
How do people deal with estate planning and the due on sale clause?
That is what marcus335 wants to do it. He wants the LLC or Corp to own the rental property. In order for company to own, the current owner need to change the title to company name.
Assign, I mean property sale to LLC/Corp. It is not like property fund/assign to Trust.
I do not understand. What do you mean by estate planning, a revocable trust creation and assignment? That is not considered as sale by county/city or lenders.
How can a rental be business is there no LLC or s-corp? It’s all on your personal tax return. That’s why I think it’d reuire a LLC to deduct the expenses.
Corporate depreciation and rental depreciation formula are same for an item.
There are two categories in rental. Active investor and passive investor. Active is mandatory to work on real estate at least 750 hours in a year. This is mainly for realtors, and not people like me who work on W2 income on IT.
We belong to passive investor, then sch-e comes into picture. You list all your income and expenses just like the way any company accounting works. All expenses are deducted that includes property tax, insurance, management, maintenance, depreciation etc. Only issue is passive investor can not deduct the loss from their active W2 income. In short, rental is a business listed in SCH-E (almost like K1).
Check amazon old copy “Every Landlord’s tax deduction guide by NOLO”
You do not need to have LLC or Corp.
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Tracy? Stockton? Btw, median numbers are worthless. All my SFHs are less than $100 per sqft and less than 10 years old.
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