From what i understand of this tax code, if you own a multi-family property and ‘actively participate’ in management, then you are eligable to receive a tax break of up to 25,000 dollars on income earned from the property. This code also states that if you earn over 100k a year, then you are not eligable for this tax break. My question is this- if I earn over 100k from my salaried job, but then buy an apartment buiding using an LLC, and file taxes seperatly for that LLC, can that tax break be eligable for income earned by the LLC, regaurdless of what my salary is?
The tax code allows the taxpayer to use up to $25K in rental LOSSES (not income) to offset other ordinary income. This passive loss allowance is reduced for income above $100K and phased out completely when income reaches $150K.
A pass-through entity LLC won’t let you bypass the passive loss allowance phase out.
Only with a C-corp or an LLC treated as a C-corp can you file a tax return for the LLC that is separate from yourself. The C-Corp or the LLC (c-corp) files a tax return in its own right and pays corporate taxes on its net income. Your personal income has no affect upon the C-corp or LLC (c-corp) income tax return.
Right. The main confusion/misconception with an LLC is about the pass-through tax liability. I have an LLC taxed as an S-corp, which is typically fine for most investors. In this case, the LLC would need to be elected to be taxed as a C-corp, which may not be worth it.