Legal Question in Real Estate Law in Massachusetts
My husband and I formed an LLC and purchased a building for which we have a mortgage. Our retail business is housed in this building and the business pays rent to the LLC monthly and the LLC then pays the monthly mortgage. Is this correct. On our tax returns, it is showing that we have an "income " for the year of $60K when in fact the money goes in and every cent goes to paying the mortgage.
2 Answers from Attorneys
I am quite familiar with this type of arrangement.
I suggest that you schedule a confidential telephone or office consultation to discuss this. Is this coming up in the process of divorce or some other type of dispute, or are you simply wondering about good management? Perhaps your husband is improperly reporting your tax data, or your accountant is improperly filing? You may have gross income of $60,000.00 which is reduced by your expenses, resulting in a lower taxable income, but it is hard to say without actually reviewing your paperwork.
I am familiar with this arrangement. The LLC should show an interest expense as well as depreciation amongst other things. I would be happy to discuss this with you but this is not an appropriate forum to do this in any detail.
You are welcome to call me regarding this issue.
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