forgot this part…
to simplify, should everything be titled to a land trust with whatever respective entity (that I own) as beneficial interest?
yes. the entity is the beneficiary. beneficiary can be changed without affecting the trust itself.
Thanks so much for the clarification!
OK, so next step is this, my personal residence…land trust with LLC as beneficiary? (the same LLC that is the bebeficiary of the other properties). CPA question: the mortgage interest on my personal residence only comes to about $3k/year…less than the standard deduction (filing single…not married). My LLC has been able to write off the interest on the other properties, but my accountant has never in 3 years been able to deduct my personal home interest. How can I take advantage of this deduction?
the LLC as beneficiary would be entitled to the full interest deduction, as well as other business expenses.
however, there needs to be a bona-fide business reason. ie: you need to be a tenant of the LLC, lease, pay rent, the whole deal.
So, you’ll pay non-deductible rent of $1,000 a month to the LLC. LLC will make $1,000 a month mortgage payment, deduct $900 of interest and be taxed on the remaining $100 of income. so, doing this just for tax savings is counter-productive. to “deduct” the missing interest, you have to pay tax on $100 and reap no additional tax savings on your personal return.
However, note that now repairs, insurance, lawn maintenance, etc become deductible expenses also. and if you set up the LLC right, employees, directors and members can receive employee benefits like insurance and medical reimbursement without being subject to the 7.5% AGI floor for itemized medical. If you’re willing to put up with the hassle, this can lead to significant tax savings.
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