1. If you are a single member LLC, and you did not incorporate, you will pay both self employment tax and income tax on the net income of the LLC.
2. Each business stands on its own. You cannot use profits from an unrelated LLC to buy rental property and expect it to reduce your profits.
3. Rental property is depreciated over 27.5 years not 15. Rental property is NOT eligible for section 179 treatment.
4. When you sell depreciated property, you have 2 kinds of gain. Gain from appreciation if it goes up in value from the original cost and gain from depreciation. The 1250 gain from the depreciation is taxed as ordinary income rates (capped at 25%).
5. If you sell in the same calendar year that you buy it, there won't be depreciation.
If I have working capital in the amount of 285k from profits from my LLC business in 2014, meaning i have not paid taxes on, and take it and buy a house for 210k and put 75k in repairs into it for a total of 285k. If I choose to rent that house I could take most of that 75k in repairs and write it off since most of it has less than 15 year life so i can take it upfront. This would mean I would only have to pay taxes on the company profits of 210k right?
Let's say I sell it a year later for 300k so do I have to pay 15% capital gains on 15k? Or would it be 15% on 90k since I depreciated 75k from 2014 all upfront?
Last Question can I depreciate the improvements that are less than 15 year upfront and just sell it instead of renting? Or does the capital gains and sell year have to be different then the year I am taking the depreciation on it?
