aether8203[at]yahoo.com wrote:

- quote -

You really need professional help. If you are NOT a real
estate professional then your ability to deduct losses is
phased out when your AGI passes $100K. At $150K your losses
are completly phased out and are suspended until future years
when your income comes back down or until you completely
dispose of the property.

The fact that you are using an LLC is meaningless, the rules
apply to all forms of organization - even a C Corporation.

If you ARE a real estate professional, then the passive
activty loss rules may not apply to you and you may be able
to deduct your losses. However, there are other rules that
apply to real estate professionals - many of them are not as
kind as we would like them to be, especially the ones that
help you qualify as a real estate professional.

What you're missing is professional help. Real estate can be
a great tax shelter - for anyone. You just need to understand
what that means. Having someone else make the payments on an
appreciating asset is a wonderful thing. Your out of pocket
cash flow is limited and your appreciation on the asset is
deferred until you sell it - pretty good.

Now you want to deduct your losses too? Well you can, when
you completely dispose of the property. Still not too bad.
Your losses accumulate and when you sell the rental you can
use the suspended losses to offset some of the income from
appreciation.

Of course, a tax pro would have explained all of this to you
had you met to discuss your plans.

Gene E. Utterback, EA, RFC

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

Myself and my partner are two active members of an LLC
(which is 100% rental properties) . It will show a loss for
the 2005 year. I understand that an LLC is a pass-through
tax entity meaning the profity/loss of the LLC can be
shared/distibuted amongst its members.

With my share of the loss, can I deduct it on my taxes?
When I briefly looked at the "Passive Rules" publication
925, is it true that if I make over $100k then I can not
deduct it? In this situation since it is a "business
entity", do I treat that loss differently than if I owned
the real estate myself as it would be treated as a
passive-activity loss?

All the investing articles I read talk about real-estate
being a beautiful tax-shelter that the rich use. Am I
missing something?

Any help would be appreciated.
Thanks!

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >