1. Yes, the LLC's actually own the property. I'd like to set each one up in Quickbooks so that I can trak them individually.
2. The LLC's are set up as single-member LLC's so they will be filed on my tax return.
I have some realtors for clients that are also property managers. Where you operate several LLCs you would want to set each up as an individual company. This will assist in the filing of your Schedule C providing that you are filing as a propriotorship and not an S Corp. If you have multiple properties that you manage you can track the income and expenses by useing the Class feature. It works perfectly in this regard. Finally, if you are filing a 1040 at the end of he year and your LLCs are listed on a schedule C, real estate losses can only be used against real estate income and not against any other LLC (not in real estate rental) you may be operating.
You said that the losses from LLC-associated real estate can not be used against any other gains to off set them. Why is this. I thought this was the whole point of setting up an LLC (outside of liability protection) so that the property depreciation losses flowed through to my personal losses and could be used to off set the gains/taxes on my personal return.
The LLC has nothing to do with it. It's not recognized for taxes. The rental losses are considered Passive Losses and used to offset other Passive Income unless you Materially Participate in the activities and they then have the same limitations and any other rental activity on Schedule E. They can apply up to $25,000 of the passive rental losses to the regular income items (with phaseouts depending on the AGI of the taxpayer)The exception to this rule is for those persons that are considered Real Estate Professionals. Those that qualify under the IRS rules as a Real Estate Professional can deduct the losses as nonpassive. You can find out more at www.irs.gov about whether you qualify for that treatment.
