rental home federal tax deductions

rental home federal tax deductions

Taxes relating to Nevada based LLC?

I have a Nevada based property. The property is owned inside a Nevada based LLC. The LLC is an equal 2 person partnership (50/50 contributions) with pass-through taxation.

There is no mortgage, the home was purchased for $100K cash.
After 1 year the gross rental income is $10K.
After deductions the net annual income for said year is $5K.

At the end of said year what are the expected federal taxes and why?

A) $0 because the $5K is written against the original $100K investment, leaving a $95K tax-basis for next year.
B) $0 because of some other reason.
C) Each person is taxed at his/her personal rate for their share of the $5K, ie x% of $2.5K
D) Other

Please provide supporting links.

If it's a partnership, then a form 1065 return would need to be filed federally, and K-1's would be issued to the partners. You have said in your example that after deductions the net annual income for the year is 5K, so that would be the profit of the partnership, and each partner would get a K-1 for 50% of that profit, or $2,500. Each person would include that amount on their federal income tax return. Your federal income tax would depend on your total income for the year, of which the $2,500 would be part of it. So I can't quite tell you what the federal tax would be on the partnership income, since your federal income tax is based on your total income, and the LLC would be part of that income.

More appropriate answer would be C.

Tax Credit for First Time Home Buyers, Government Mortgage Down Payment Assistance Program

 

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rental home federal tax deductions

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