Sooooo many questions. Some may be GD material.
I own a home and am planning to move in 18 months. That means I will be able to sell my house and take the equity tax-free. I figure that would be $30,000. Now I’m looking at it as a no-brainer to keep it and rent it out. Thing is that it was so crappily built that within the next 10 years it will need some major work like a roof. Is there any financial (GQ) reason I shouldn’t make the house a rental and instead take my $15,000 (half of 30k) and look for other real estate investments considering I now lose the tax-free benefits of the $30,000 if I move and don’t sell the house?
So my thought was to take my property tax liens and the house (if it becomes a rental) and have it under an LLC*. If I sell the house to the LLC, can I get the profit tax-free or would the IRS nail that as fraud?
- The house would be a separate LLC owned by the first one.
I know that if you make an investment and sell it then you pay tax on the capital gains. Clearly with real estate I might be long term but what if I start flipping houses? I make a $40,000 profit on a house I still owe (short-term capital gains) tax on the $40,000 even if I reinvest it in a new house. So at any point should I consider a Class C corporation?
I am assuming for full tax benefits then I should make all of my real estate produce active income. The 750 hours in the real estate market is not a big problem since I have summers off and could take the tests as necessary to be a realtor. Do I lose all of the benefits of active income if I use a property management company instead of personally dealing with my rental? Does all of the corporate shielding affect active income at all.
If I have a rental under a class S corp and decide to put it in my name as owner to owner-occupy-live in, is there anything special I need to do IRS-wise?
More questions as I think of them. Like just thought of - when will mortgage companies start looking at my parent LLC’s credit and not my personal credit when borrowing for the next deal?