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You can certainly write of certain costs of business start-up costs ...
However, (please don't shoot the messenger here) but the tax benefit of investing THOSE specific proceeds will come really in three forms: (1) You get to depreciate the property every year and take a tax deduction, when/if you eventually sell you will only pay capital gains tax (rather than the higher ordinary income tax) on any gain and (3) That gains will FURTHER be reduced by any investment you made originally, not taken as depreciation over the years
This is what IRS calls capitalizing the investment.
On setting up the LLC, that's an excellent idea for liability purposes. The LLC is a pass-through for tax purposes (just like a partnership, an S-Corp and the sole proprietorship that you really are now, by default) so you'll get the benefit of taking any losses against other income the lower capitals gains rates that only individuals get (Corporations dont) BUT you'll get the liability protection of a corporation (creditor, lawsuits, etc. can not come after you PERSONALLY for liabilities of the LLC. ... SO the LLC is really the best of both worlds
And on the STARTUP costs you CAN write off, here's an excellent piece from SBA (Small Business Administration) on that: http://www.sba.gov/community/blogs/community-blogs/small-business-cents/startup-cost-tax-deductions-%E2%80%93-how-write-expense
Here's the IRS guidance on business deductions, generally: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Deducting-Business-Expenses
And finally here's the IRS guidance on capitalizing and writing off the property investment over time: http://www.irs.gov/taxtopics/tc703.html
Hope this Helps
I still don't see you coming into the chat session, so I'll move us to the "Q&A" mode. … Maybe that will help … (We can still continue a dialogue there, just not in real-time chat, as we can here)
Please let me know if you want to discuss this further or have any questions at all...
Thank you. Do you have a good link on how to start an LLC?
From your answer, I can take deductions for expenses now without being an LLC, but I can't deduct the cost paid for purchasing the building. The LLC protects me from lawsuits on my personal assets. Right?
Sorry Tracy,Forgot to include the link on setting up the LLCHere ya gohttp://www.nolo.com/legal-encyclopedia/illinois-form-llc-32092.htmlLane
Thank you. I will study what you sent me.
Take care and keep up the great work.