Land - What Can I Deduct
i currently use schedule E for a rental. i just inherited some acreage of land. can i also place this on schedule E ? it does not earn rental income. i am holding it for long-term investment. if i can place it on E, then i can deduct the property taxes and limited maintenance on it, without losing my standard deduction. and i would also be able to get capital gains on it, when i sell it.
another option. if i hold it in my pension account, i can deduct all expenses from my income. but when i go to sell it (over a year), is there a way to make that portion of my pension account subject to capital gains, so that when i eventually withdraw the income, i can get capital gains on it, instead of declaring it as ordinary income ?
darn. that is bad news. i dont itemize. can i use the tax to up my basis, instead of declaring it schedule A ? that is a 100% waste.
Put it in an LLC, taxes and maintenance become expenses that create a loss for the year.
Chris
thanks for all the comments.
yea, i knew that llcs had an expensive annual fee. plus i dont really want to complicate things for myself, if possible.
i am placing it in a trust with its beneficiary being another trust.
i still need to find out what the ramifications for it being in a pension plan. mainly, whether i lose my capability of having any capital gains treatment, or not.
Yeah, the CA LLC thing stinks. They have the $800 franchise tax PLUS the LLC fee once receipts exceeds 250k. The LLC fee caps at 12k, but that is EVERY year. It really stinks!
There are currently two cases challenging the LLC fee as unconstitutional that the state has lost (on appeal), but even if the state were to lose it would have no affect on the $800 annual franchise tax.[ Edited by finniganps on Date 04/17/2007 ]
To add to what finniganps said, even with a net operating loss, in CA you still have the $800 LLC fee. And with the original poster being in CA, it’s something that definitely needs to be taken into consideration. This may be a question that would be best answered by a CPA, or whoever is handling the original poster’s tax stuff.
Consider putting it into a self directed Roth IRA. Even if sold at a profit (short or long term) the profit is tax free if you take it out under IRA guidelines