Announcement

Collapse
No announcement yet.

collected rent going to to solo 401k ?

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • jfoxcpacfp
    replied
    @Zaphod is correct. Rent is considered "passive" income, not "earned" income, which is a requirement of retirement plan contibutions/participation. The only way rent can qualify as earned income is if you are a real estate professional and you don't qualify. This is an area that the IRS scrutinizes, too.

    Leave a comment:


  • Zaphod
    replied
    No its not, but that means no SS tax either so it aint all bad.

    Leave a comment:


  • mypostefan
    replied
    Hm...I may have just answered my own question

    See the reply by neoptolemus412 on

    http://forum.mrmoneymustache.com/real-estate-and-landlording/solo-401k-for-rental-income/

    looks like rent is not considered earned income, thus not eligible

    Leave a comment:


  • mypostefan
    started a topic collected rent going to to solo 401k ?

    collected rent going to to solo 401k ?

    I am an accidental landlord. I rent out one single property as myself and declare the rent as income on my taxes, after I deduct the mortgage interest and whatever expenses I have with the property. Total rent that I collect per year is in the mid 20k, and the mortgage interest deduction I take is about 5k a year. I am in the 33% tax bracket.

    I was wondering if I should start an LLC, pass the house to the LLC, and then the LLC rents the house out. Besides some protections in case of a law suit (the LL in LLC), do you happen to know if I can do any of the following:

    1. take the exact same exceptions at tax time (mortgage interest and expenses).

    2. start a solo 401k and contribute to it from rent money that I collect. I would contribute all the rent I collect if I could, so nowhere near the 50k+ limit of the solo 401k.

    Will it be more tax advantageous to have an LLC?
Working...
X