Debbie from our School of Wealth Strategy asks the following question:

Q: My life partner and I purchased two single family homes this year as rental properties and see advice as to what entity should be established to take full tax advantage/asset protection. One of these properties is in the Go Zone and we seek advice as to allowable depreciation on this property.

A: Seems like a simple question, doesn't it? As simple as it seems, we actually have multiple questions and sub-questions. Let me address them one at a time. The first question is which entity is best for tax purposes. This, of course, depends on your ultimate strategy and where you live and where you invest. In most states, we recommend forming an LLC that is taxed as a partnership. Especially because you are not married, we suggest you have an attorney draft an operating agreement for the LLC. We also suggest you get with your Tax Strategist make the most of the tax benefits of the LLC. If you don't already have a good Tax Strategist, please call our office at 866.467.5809 and we will be happy to get you lined up with a qualified Tax Strategist.

The second question is closely related to the first and this is the asset protection question. Again, in most states we would recommend an LLC, but ALWAYS recommend you speak to a qualified asset protection attorney. If you don't know one, call us at we will recommend one that will meet your requirements.

The third question is about the depreciation. And this has a couple of sub-questions. If you qualify for the GoZone depreciation, you can take 50% of the cost of the property, not including land, plus ordinary depreciation on the remaining 50%. But even if you qualify for the GoZone depreciation, you may be limited as to how much you can take this year, depending on whether you are passive or active in the real estate, your adjusted gross income, and whether you qualify as a real estate professional. For answers to all of these sub-questions, I recommend you go to our website at http://www.provisionwealth.com/products and subscribe to our School of Tax Strategy where you will get a new course on a specific tax strategy each month, including a course on making the most of your real estate tax benefits and one on depreciation.

It sounds like what you really need is a good Tax Strategy. For this, I strongly recommend you speak to my assistant, Beth Rojas, at 866.467.5809 and set up an appointment with one of our Tax Strategies to determine the best approach for you.

Warmest regards,

Tom