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Owning commercial real estate allows one to depreciate it regardless of it collecting rent or not. It is not possible to close this loophole because 322 Prince
by notyourday 8y ago
Owning commercial real estate allows one to depreciate it regardless of it collecting rent or not.
It is not possible to close this loophole because 322 Prince St, LLC does not have to rent the space to Joe's Boutique for $7,000 a month rather than Starbucks for $17,000 a month - it can rent that space to "JP772 Holding, Inc" out of Nevada for $10/day which would be owned by the members of 322 Price St, LLC which would satisfy the rental requirement and keep the place unoccupied until someone offers $17,000/mo in rent.
- brenschluss 8y agoI thought that technically the LL then owes the IRS in imputed income? (Income based on market-rate rental values)?
- pmalynin 8y agoImputed income is not taxable in the United States, according to Wikipedia.
- megaman8 8y agoi think it may have to do with the type. I won a free yearlong gym-membership in a contest, from a govt workplace and was told I would have to pay imputed taxes on it. Needless to say, I turned it down.
- notyourday 8y agoThat's because it was a gift of a fixed value that gym declared. If gym ran it as a promotional sale for $1.00 then you would have needed to pay taxes on a $1.00. It is similar to person A borrows from a person B $10,000. B pays back $100. Person B decides that A is a deadbeat and declares $9,900 a loss. Since B no longer needs to repay $9,900 the $9,900 becomes income to A. B sticks A with a 1099 for $9,900. Now A needs to pay taxes to the IRS on $9,900 that he got from B.
- notyourday 8y agoNot in the United States.