Whoa filling these paper work myself makes me appreciate the services of professionals like yourself, I must say though that it is a worth while learning experience.
I need some insight on how to fill it properly to avoid errors down the line, could someone please guide me through it as it appears in the form online so that way I will not be asking anymore questions.
For my real estate business, I plan on holding some properties and renting them out and then selling some. I also plan somewhere along the line to hire some help. I am giving you all this information so that you can best guide me on how to fill out this online form.
You don’t say how your LLC will be treated for tax purposes. I am assuming that you elected either disregarded entity or partnership. In my opinion, you don’t need to file this form. You will not be engaged in any business activity which requires this form to be filed.
Instead, at the end of the tax year, all your rental income and expenses will be reported on your personal 1040, Schedule E. The taxable income from your 1040 will migrate to your individual state income tax return.
Right now I chose the default position of disregarded entity. Anyways
Part of my strategy is to invest in homes in preforclosure by performing shortsales on them (shortsale is a technique where you discount the mortgage on the house with the lender as long as the seller agrees to sell you the house hence saving them from the foreclosure), and many times one will run into people who really want to stay in their homes. I am studying ways where the investor can talk with the bank to perform a loan remodification for the seller so that whatever back payments the seller is owing is added to the back of the term of the seller’s mortgage. Well I plan on do this for sellers that qualify for a fee of $250. Hence my question is that since I will be doing that, dont I need to apply for a sales and use tax account with Maryland and also a Use tax account by itself?
As far as I am aware, there is no sales tax on services. If you are selling merchandise, then you have to charge sales tax and you will need to file the form.
Please note that your stated strategy in your first post was to buy and hold for rental income. If you have now changed your strategy, my opinion is that you still don’t need to file this form. You will not be collecting sales tax from your customers, nor paying any to the state for the service you describe.
Are you also aware that MD law governs “foreclosure consultants” and requires you to post a $200K bond for the type of service you are proposing. In light of this, I think you would want to charge a lot more than $250 for each successful transaction.
I am aware of the foreclosure law in maryland and I was not trying to mess with preforeclosure without a consultant in maryland. That strategy of mine I plan on using in VA and DC.
Then you need to also register your MD LLC in VA and probably in DC. Additionally, you will have to file VA state and DC income taxes in addition to your MD state taxes.