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Thanks for your reply. That makes sense. I know you're not a tax accountant, but can you explain a little more about how putting the properties into an LLC could possibly reduce our tax exposure? I suppose that depends on the corporate tax rate in our area vs individual income tax rates?
Our expenses on the properties, at the current time, are fairly high relative to the income on the properties (i.e. the mortgages eat up most of the revenue). However, as the years go on, this ratio will change as the mortgages get paid off, and the rent goes up.
When you report the income/expenses for the two properties on the individual income tax return, I believe there are some limitations on offsetting the expenses of one property against the revenue of the other - they are treated as separate entities. Might an LLC solve this problem since if they're one business entity all of the income and expenses are "bundled" as one corporate entity?