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Originally posted by HardDrive
My wife and I will be buying some rental property this, year. Our primary goal is reducing our taxes.
It has been suggested to me that I form a separate LLC for each piece of property. The idea is to shelter both our family, as well as the other properties from liability in the case of a law suit.
I'm all for this, but will this have any effect on our ability to reduce our tax liability?
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The LLC passes on income to your wife and yourself. With regards to taxes, this is no different than owning the properties in your own name.
Personally, and I know you didn't ask, but owning properties in an LLC is overrated. Maintain your properties, take care of any hazards in reasonable fashion, and your liability is reduced immensely. Carry insurance on each property + an umbrella policy. A $2M umbrella is a few hundred bucks a year.
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In addition, I am open to nearly ANY suggestion that will not land me if jail for reducing taxes.
Anyone invest in oil exploration?
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motion mentioned oil exploration in another thread. It might have promise, but with oil companies sitting on mountains of cash, don't you think they would fund exploration?
As VAsteve mentions, your passive losses are restricted to $25k/year and it is phased out at high incomes. You may carry the losses foward to wash out future passive gains or capitals gains (in the event of a property sale).
Unfortunately, the deductions aren't great. RE is best viewed from a window looking far into the future.
I wish you the best of luck.
jurgen