and rent them out, is this considered a "business?"
Are there tax breaks?
Thanks.
2006-10-17 04:53:31 · 6 answers · asked by the_breeders_cup 1 in Business & Finance ➔ Renting & Real Estate
good answer. Keep em coming!
2006-10-17 05:34:49 · update #1
Its called real estate investing, and as far as a business i would form an LLC. Investing in real estate is best thing you can do for yourself to secure financial future. Everyone here has mentioned depreciation but there is more advantages to owning real estate just besides depreciation there is alot tax right off you can do. I would consult a lawyer that has in extensive background in investing real estate to give proper advice on what to do. If you would like to know about this let me know I wold be happy to help and I can refer a good real estate investing lawyer as well.
2006-10-17 10:12:16 · answer #1 · answered by jrfern05 2 · 0⤊ 0⤋
Yes, this is a business, even though it is owned by an individual. I suggest you go to irs.gov web site. Under "individual" do a search for Schedule E.
It is a form that you will have to file along with your main tax return (Form 1040). The Schedule E is for rental income businesses, which is what you have, even if you only rent one property.
The so-called "tax-break" that you may have heard about is "depreciation". That is a systematic write-off of the amount you paid for the property, excluding the value of the land. It is a tax break because each year you get to subtract the depreciation amount from your other income, even though you aren't actually spending any money on the depreciation.
2006-10-17 05:45:47 · answer #2 · answered by etilyad 2 · 0⤊ 0⤋
There are tax breaks. I could be considered a business if you have enough of them. But you must file a schedule C with your tax returns. You are able to make many deductions in investment property. Some people consider this hobby income. In order for it to become business you would have to structure it as one in the form of a limited partnership, LLC or or a sub-chapter S corp.
I am a mortgage professional
2006-10-17 05:44:41 · answer #3 · answered by golferwhoworks 7 · 0⤊ 0⤋
Yes, its considered a business/industry. However YOU do not become a business by owning them. You'd have to incorporate or form a partnership to be considered a bussiness.
If you just go buy a house, you'd have to get the mortgage and let them know that you are not using as a primary residence (usually you get a slightly higher interest rate). Then during tax time you report the income you got as well as the expenses.
2006-10-17 05:41:36 · answer #4 · answered by Anonymous · 0⤊ 0⤋
I don't know where you're at, but in Iowa I didn't have to get a tax ID # to own rental property. Therefore it was just a "hobby". I didn't have to do a separate tax return, it just went on my return saying how much I brought in, how much I spent, property tax, and depreciation. I did get a separate checking and savings account for them so there was no co-mingling of funds and easier for record keeping.
2006-10-17 05:40:41 · answer #5 · answered by chefgrille 7 · 0⤊ 0⤋
Yes, you are in the business of being a landlord. Tax breaks vary depending on your area, but depreciation of the property is something you'll want to look in to.
Find a local landlord and ask about all the pros and cons of renting property (not just taxes).
Mike Honeycutt
2006-10-17 05:32:25 · answer #6 · answered by mahoneycuttnc2002 6 · 0⤊ 0⤋
lol, You better talk to a CPA, if the IRS deems you a dealer it can be really expensive since all your profits will be considered ordinary income and not subject to the same treatment afforded under the capital gains tax. I think you go and read up on it.
An article on dealer in real estate: http://www.trel.com/investdeal.html
Buena Suerte
2006-10-17 07:44:33 · answer #7 · answered by newmexicorealestateforms 6 · 0⤊ 0⤋