I have some specific questions regarding LLC logistics for rental properties. My plan is to have one management/administrative LLC to start off. This will have its own EIN, bank account, and business credit card, etc. All initial scouting, research, expenses, etc will come out of this account. Eventually, it will be used to purchase landscaping equipment, business computers, trade subscriptions, etc. I'm in a state that doesn't recognize serial LLCs.
When a property is purchased, it will be put into its own LLC with its own EIN and bank account. Certain expenses and income will be unique to that property and will be transacted in its own bank account.
My specific questions relate to how to properly split up expenses through the "main" LLC?
1) For instance, if I bought lumber for repairs through the main LLC, I could cut a check from a specific property LLC for this amount. This seems more straight forward to me.
2) How do I divvy out other expenses, such as computer, lawn equipment, home office expenses, etc?
3) How does the income get split up? Do I leave it all in the individual property LLCs?
4) Should the main LLC charge a management fee to the other properties, besides dollar for dollar reimbursements? Will this convert passive income to active income?
5) Does the IRS rule about only claiming a loss 2/5 years apply to each individual LLC or my tax returns as a whole? We may be coming up on that rule as we have filed other non-real estate self-employed businesses in the past that showed a loss. Will it reset with a new business?
6) How do I take profit out of a pass through LLC set up like this? Do I just write a check to my personal checking account when necessary?
Thanks in advance!
When a property is purchased, it will be put into its own LLC with its own EIN and bank account. Certain expenses and income will be unique to that property and will be transacted in its own bank account.
My specific questions relate to how to properly split up expenses through the "main" LLC?
1) For instance, if I bought lumber for repairs through the main LLC, I could cut a check from a specific property LLC for this amount. This seems more straight forward to me.
2) How do I divvy out other expenses, such as computer, lawn equipment, home office expenses, etc?
3) How does the income get split up? Do I leave it all in the individual property LLCs?
4) Should the main LLC charge a management fee to the other properties, besides dollar for dollar reimbursements? Will this convert passive income to active income?
5) Does the IRS rule about only claiming a loss 2/5 years apply to each individual LLC or my tax returns as a whole? We may be coming up on that rule as we have filed other non-real estate self-employed businesses in the past that showed a loss. Will it reset with a new business?
6) How do I take profit out of a pass through LLC set up like this? Do I just write a check to my personal checking account when necessary?
Thanks in advance!
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