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Originally posted by VaSteve
Carnutzz is correct. The real way to generate that loss that you can use against your income is to depreciate the property (in the tax sense) over the 27.5 years allowed. Guess what happens when you try to sell, major gain! Thus you have to buy another investment property (or some other business asset) in a 1031 like kind exchange. (There are people that actually link people up looking to make these kinds of trades). You pay taxes on any of the gain your realize in cash (ie. not a straight trade).
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If you generate losses, though, they will carry forward to offset such gains in the future. This seems to eliminate Harddrive's desired tax deductions NOW. This assumes Harddrive isn't ready to head into landlording now and put in 750 hours per year...
Randy is right about financing under the LLC. Eventually, one would like to see the LLC stand on its own and qualify for mortgages. However, this is not something to consider now.
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I can't comment on having a bunch of LLC's. Sounds like some of these RE books' nonsense, but it may be different in your state. When I was renting out we attended a seminar. The Atty that put it on recommended owning in your name. You could own up to four. Then your spouse could own four in her name, etc.
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Not hearing the attorney's remarks, I must speculate on his four properties per name advice. In the past, FHA would underwrite four mortgages per SSN. Qualify four mortgages under yourself. Qualify four mortgages for your spouse. After you hit four mortgages per social security number, you get conventional mortgages. Sounds fine, but this was all good BEFORE the massive growth in the lending industry. These days, there are so many lenders and so many programs that going FHA isn't all that special.
Randy P, am I close on that or is the hashish still doing the talking?