My wife is receiving a $300,000 home gifted from her parents. Its cost basis is likely $200,000. We plan to put it in an LLC and rent it out. Can we depreciate the house if it’s free to us?
When we get income from the rental, do we have to pay social security taxes on it?
I’m not sure what the tax affect is if you plan to set up an LLC to manage the rental property. I did find an article that indicates that you normally would not pay social security taxes on rental income (link included below). However, I recommend that you contact an attorney and ask these questions. You will most likely need to utilize that person to assist you with the set up of the LLC as well.
Best of luck,
Crystalynn Shelton, CPA
315 Madison Avenue, 24th Floor
New York, NY 10017
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