How to add mortgage interest for property purchased personally used as rental property in LLC

Forum|Forum|1 year ago
March 5, 2025
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Hi,

We bought a rental home with some friends, listed only in my husbands name. We then created an LLC to manage the business. It is a multimember LLC so we have to file a 1065. We didn't have much rental income due to it not being used the entire year and the repair expenses, but without the mortgage interest deduction we will owe tax even though we have a loss. Where do I add mortgage interest for the rental expenses on the 8825 if the property is only in my husbands name and not the LLCs?

Thanks!

Best answer by PatriciaV

It depends on who paid the mortgage interest. If the LLC paid the interest, you can claim that as a business expense. But if an individual member paid the interest and was not reimbursed by the LLC, that individual would claim the interest on their personal tax return.

If the home wasn't rented for more than 14 days of the year or if you didn't charge fair market rent, it is not considered a rental property. You can still report the income and expenses on the LLC return as a business activity not a rental.

You must rent the property for more than 14 days and charge fair market rent in order to report this as a rental activity.