How to claim deductions for rental properties owned through an LLC - double dipping possible?

I own a couple rental properties with my brother through our LLC. We've been doing this for about 3 years now and I handle most of the financial stuff. When I do our LLC taxes, I know we can deduct the mortgage interest, property taxes, depreciation, and all the maintenance/repair costs against the rental income we get. But here's what I'm confused about - can I ALSO claim these same deductions on my personal tax return? Part of me thinks no way, that would be counting the same expenses twice. But then my friend mentioned something about "pass-through entities" and now I'm second-guessing myself. The properties generate about $3,800 in monthly income combined, but with all the expenses, especially after those surprise plumbing issues this year, we're barely breaking even. If there's a legal way to benefit tax-wise on my personal return too, that would be super helpful. Anyone here familiar with LLC rental property tax situations? Thanks in advance!

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18 comments

Kai Rivera

•8M

Tax professional here. No, you cannot deduct the same expenses twice - once at the LLC level and again on your personal return. That would indeed be "double dipping." Your LLC is likely what we call a "pass-through entity," which means the LLC itself doesn't pay taxes. Instead, the profits or losses "pass through" to your personal tax return. So the deductions for mortgage interest, property taxes, depreciation, etc., are already factored into the net income or loss from the LLC that appears on your personal return. You should receive a Schedule K-1 from your LLC that shows your share of the business income, deductions, and credits. This is what you'll report on your personal return, typically on Schedule E. The rental property expenses are already accounted for in this amount.

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Kai Rivera

•8M

Exactly right. All those expenses (mortgage interest, property taxes, repairs, etc.) are already accounted for on the LLC's tax return, which then flows to your K-1. The number you see on your K-1 is your share of the net income or loss after all those deductions have been taken. If you were to deduct those same expenses again on your personal return, the IRS would consider that claiming the same deduction twice, which isn't allowed. The pass-through structure means you get the benefit of those deductions exactly once - through the reduced income (or increased loss) shown on your K-1.

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Anna Stewart

•8M

I was in almost the exact same situation last year with my duplex rental property. I started using taxr.ai (https://taxr.ai) to analyze all my rental documents and it saved me a ton of headaches with figuring out which deductions were applicable where. The software automatically identified several depreciation items I was missing and helped categorize repair vs. improvement expenses correctly. It even flagged that I was accidentally trying to double-count some expenses between the LLC and my personal return. If you're managing multiple properties through an LLC, it's definitely worth checking out, especially for tracking those maintenance receipts and properly calculating depreciation.

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Anna Stewart

•8M

It definitely handles properties in multiple states. The system analyzes your documents based on the property location and applies the correct state-specific rules. I have properties in Michigan and Tennessee, and it correctly identified different depreciation rules that applied. I've found it much more specialized than TurboTax for rental properties. The regular tax software asks generic questions, but taxr.ai is specifically designed for investment properties and business documentation. It's much better at identifying deductions specific to rental properties and has saved me thousands compared to what I was finding with regular tax software.

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Morgan Washington

•8M

Just wanted to update - I tried taxr.ai after seeing it mentioned here and it's been a game changer for my rental property taxes! The document analysis caught that I had been miscategorizing some capital improvements as repairs (which would have been a problem in an audit). The best part was how it organized all my deductions properly between my LLC and personal returns so there was no double-counting. It even found nearly $4,300 in additional depreciation deductions I'd been missing on some property upgrades from 2023. Definitely worth checking out if you're managing rental properties.

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Kaylee Cook

•8M

After reading this thread, I can relate to the frustration. I spent 3 WEEKS last year trying to get someone at the IRS to answer questions about my rental property LLC deductions. Kept getting disconnected or waiting for hours. Finally used Claimyr (https://claimyr.com) after seeing it recommended on another thread. They got me connected to an actual IRS agent in about 15 minutes who answered all my questions about LLC pass-through deductions. You can see how it works here: https://youtu.be/_kiP6q8DX5c Saved me so much time and stress, especially when I was confused about how to handle some major repairs vs. improvements on my rental. The IRS agent explained exactly how to categorize everything correctly to avoid issues.

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Kaylee Cook

•8M

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Lara Woods

•8M

I need to eat my words from my earlier comment. I tried Claimyr yesterday after being on hold with the IRS for 2 hours trying to get clarification about my LLC rental property deductions. The service actually worked exactly as advertised. Got a call back in about 25 minutes and was connected to an IRS representative who answered all my questions about how to properly handle some unusual rental income situations with my LLC. Saved me hours of frustration and confirmed that I was handling my K-1 deductions correctly. Definitely using this again next time I have tax questions - wish I'd known about it years ago!

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Adrian Hughes

•8M

Active participation is less stringent than material participation. For active participation, you need to make management decisions like approving tenants, deciding on rental terms, approving repairs, etc. You don't necessarily need to do the physical work yourself. Based on what you described, you would likely qualify since you handle the management aspects. Your brother would also likely qualify since he's involved in the actual maintenance work. Keep good records of the time you both spend and the decisions you make related to the properties. A simple log with dates and descriptions of rental-related activities is usually sufficient.

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