Passive tax status (by Bill [WA]) May 1, 2008 10:32 AM
Passive tax status (by Jeff S [MI]) May 1, 2008 10:55 AM
Passive tax status (by Red [GA]) May 1, 2008 11:29 AM
Passive tax status (by Bill [WA]) May 1, 2008 11:49 AM
Passive tax status (by Jeff S [MI]) May 1, 2008 12:38 PM
Passive tax status (by John... [MI]) May 1, 2008 12:43 PM
Passive tax status (by Marv [IL]) May 1, 2008 2:53 PM
Passive tax status (by Bill [WA]) May 1, 2008 2:55 PM
Passive tax status (by Jeff S [MI]) May 2, 2008 5:51 AM
Passive tax status (by marv [IL]) May 2, 2008 6:14 AM
Passive tax status (by Marv [IL]) May 2, 2008 6:15 AM
Passive tax status (by monic [NY]) May 2, 2008 2:26 PM
Passive tax status (by Bill [WA]) Posted on: May 1, 2008 10:32 AM Message:
State Specific Question About: WASHINGTON (WA)
How can you maintain a passive income status for tax purposes if you exceed the number of hours stipulated by IRS for management of your personal investment properties? --97.114.xx.xxx |
Passive tax status (by Jeff S [MI]) Posted on: May 1, 2008 10:55 AM Message:
Are you trying to NOT become a real estate professional or something else ? Generally, I LIKE to be an active participant, what rules are you trying to get away from ? --207.238.xxx.xxx |
Passive tax status (by Red [GA]) Posted on: May 1, 2008 11:29 AM Message:
I don't know how the IRS could prove you actually worked a certain number of hours on something. That has to be one of the hardest thing to prove. They may have something where they guesstimate based on a formula, but that could probably be fought.
I'm very curious as to why you would want to do this. Most of us seek to become RE professionals (not realtors or brokers) which requires proving to the IRS that we did it for more than 750 hours.
--71.236.xx.xx |
Passive tax status (by Bill [WA]) Posted on: May 1, 2008 11:49 AM Message:
Because I have a formal office and secretarial staff. When filing my 2007 taxes, my accountant gave me this information. I'm trying to find out if it's true that if you establish yourself as a real estate professional by devoting in excess of 700-800 hours in formal management of your investment properties, that you can be deemed a "professional", thus triggering social security, medicaid and other tax withholding expense for yourself personally. --97.114.xx.xxx |
Passive tax status (by Jeff S [MI]) Posted on: May 1, 2008 12:38 PM Message:
Bill:
If you have an office and staff and in this business, how can you argue that you are not a real estate professional ? The salaries and wages paid to those folks are subject to social security taxes, how can you then argue that you are not subject to those same taxes ? --207.238.xxx.xxx |
Passive tax status (by John... [MI]) Posted on: May 1, 2008 12:43 PM Message:
Indeed -- are you trying to argue that you are passive in your business, but all of your employees are not? Good luck with that. :)
- John...
--207.241.xxx.xx |
Passive tax status (by Marv [IL]) Posted on: May 1, 2008 2:53 PM Message:
Everyone is considered to be a passive investor unless they file an election to be a real estate professional. --98.213.xxx.xxx |
Passive tax status (by Bill [WA]) Posted on: May 1, 2008 2:55 PM Message:
Marv, thank you for your input. Could you clarify? What is it you mean by "file an election"? --97.114.xx.xxx |
Passive tax status (by Jeff S [MI]) Posted on: May 2, 2008 5:51 AM Message:
Marv/Bill:
I wonder - if he he has an office and staff - what method was reported for the business - is it a schedule C, or something else ? Is this the main or only means of support for Bill, or does he have a full time job ? What are the other income sources ? I am only assuming that his accountant/CPA/preparer had these answers and made a judgment based on them. There is a long list of questions and if audited I am sure they would be asked ..... Knowledge of all the facts and circumstances helpful in making a (correct) decision IMO ..... --207.238.xxx.xxx |
Passive tax status (by marv [IL]) Posted on: May 2, 2008 6:14 AM Message:
You would file something like this.
Under IRC Regulation 1.469-9(g)(3), the taxayer hereby states that they are a qualifying real estate professional under Code Sec. 469(c)(7), and elect under code Sec. 469(c)(7)(A) to treat all interests in rental real estate as a single rental real estate activity. --98.213.xxx.xxx |
Passive tax status (by Marv [IL]) Posted on: May 2, 2008 6:15 AM Message:
If I were a real estate broker, I would file my brokerage business on Sch C and my rentals on Sch E. --98.213.xxx.xxx |
Passive tax status (by monic [NY]) Posted on: May 2, 2008 2:26 PM Message:
This is a side question, but I'd like to avoid self-employment taxes and Sched. C-related taxation as much as possible - however here is the challenge:
I am also hoping to build up my new LLC's separate credit score and report with its own income and tax returns (that way at the 1-2 year mark it will be able to qualify for its own business lines of credit and loans separate from me (so that I don't have to be the guarantor on every loan and line of credit, though I still plan to be jussst as responsible :) As a separate entity, I could also sell the company and any real estate or business lines of credit it has established to a buyer.
So if anyone has any suggestions on how to save on taxes now (sched E vs. sched C?), while building that income/credit profile for the separate entity later (sched C but higher taxes?), I'd definitely appreciate any ideas - thank you!
I know I'll need to talk with an accountant/tax strategist coming up - excited to go to the Al Aiello/Mr.Landlord thing coming up - but if anyone has any ideas on how to get the best of both worlds meantime, I'd definitely appreciate it - thank you! --96.26.xxx.xxx |
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