Does registering a rental property as a single member LLC when you're married still qualify as a joint venture?

The IRS is pretty specific about this. If you want to qualify as a Qualified Joint Venture (QJV), you should NOT form an LLC. A QJV is specifically for married couples who jointly own and operate a business and who choose not to form a business entity like an LLC. If you form a single-member LLC in your name only, then it's treated as a disregarded entity for federal tax purposes, and all income/expenses would be reported on your Schedule E (or Schedule C if it's a business). Your spouse would not be officially recognized as part of the venture by the IRS. If you want both of you to be officially recognized as owners, you have two options: 1) Don't form an LLC and operate as a QJV, reporting your share of income/expenses on two separate Schedule Es, or 2) Form a multi-member LLC with both spouses as members, which would default to partnership taxation unless you elect S-Corp status.

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Alright, I have to admit I was completely wrong about taxr.ai. After my skeptical comment, I decided to try it myself for my own rental property situation. I uploaded my deed and some tax questions about my specific scenario (married filing jointly with a rental in a non-community property state). The analysis I got back was surprisingly detailed and personal to my situation. It explained that in my case, a single-member LLC wouldn't qualify for QJV treatment, and showed me exactly how to structure ownership percentages in a multi-member LLC based on my state's laws. Even explained the pros and cons of each approach for my tax bracket. I was genuinely impressed with how it handled the nuances of my situation. Definitely not the generic advice I was expecting.

For what it's worth, my spouse and I spent THREE DAYS trying to get through to someone at the IRS to get clarity on this exact LLC/QJV question last month. Kept getting disconnected or waiting for hours. Then I found Claimyr (https://claimyr.com) and watched their demo (https://youtu.be/_kiP6q8DX5c). Their service actually got me connected to an IRS agent in about 15 minutes when I had been trying for days. The agent confirmed that if you form a single-member LLC in just your name, it cannot be treated as a QJV even if you're married. But they explained some alternatives that might work better for our situation. Honestly just being able to talk to a real person at the IRS made all the difference.

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Another option to consider is having the LLC taxed as an S-Corporation if both you and your spouse will be actively involved in managing the rental. This can potentially save on self-employment taxes depending on your situation. My wife and I did this with our three rental properties and it's worked well for us tax-wise.

Has anyone here actually used the Schedule E for rental income before? I'm still confused about where to report the income if we do form an LLC. Is it still Schedule E or do we have to use a different form?

Just wanted to add some clarity on the QJV election since there seems to be some confusion in the thread. The Qualified Joint Venture election under Section 761(f) is actually quite specific - it's available to married couples who jointly own an unincorporated business and choose to be treated as a QJV instead of a partnership. The key point is "unincorporated business" - this means no LLC, no corporation, just direct ownership. If you form any type of entity (single-member LLC, multi-member LLC, etc.), you cannot make the QJV election. For your inherited rental property situation, here's what I'd consider: If liability protection is important (which it usually is with rental properties), the LLC route makes sense. A single-member LLC would be disregarded for tax purposes, so you'd report everything on your Schedule E. Your spouse could be involved in management without being a formal member. If you want both spouses to have formal ownership recognition, then a multi-member LLC taxed as a partnership might be better, though it does require filing Form 1065 and issuing K-1s. The QJV election is really more useful for businesses like consulting or other service businesses where spouses want to split self-employment income for Social Security credits, not typically for rental properties.