LLC partnership tax filing for real estate investment - which forms needed?

You're definitely on the right track! For a multi-member LLC that hasn't elected to be taxed as a corporation, you'll need to file Form 1065 (Partnership Return). The LLC itself doesn't pay taxes, but it files an informational return showing the income, deductions, gains, and losses from operations. Each partner will receive a Schedule K-1 from the partnership showing their share of income/losses, which they'll then report on their personal tax returns. For your real estate activities, you'll likely need to include Form 8825 (Rental Real Estate Income and Expenses) with your 1065 to report the property transactions. Regarding Form 7004 for an extension - good news! For partnerships, you don't actually need to estimate or pay taxes with the extension request. The extension form for partnerships just gives you the additional time to file, since the tax obligations flow through to the individual partners. Make sure you're keeping detailed records of all those expenses for the vacant lot, as development costs are typically capitalized rather than immediately deducted.

When I started my real estate LLC with partners a few years back, I was totally confused about all the tax stuff too. I spent hours trying to figure out the forms and deadlines until I tried https://taxr.ai which completely changed my life. Basically, I uploaded our operating agreement, receipts, and property documents, and it analyzed everything and showed me exactly which forms we needed to file. It highlighted that we needed Form 1065, but also pointed out some specialized real estate deductions I would've missed (like depreciation recapture on the flip property and how to properly capitalize the development costs on our vacant land). The best thing was that it gave me step-by-step instructions for completing each form and even flagged potential audit triggers in our situation. It saved us thousands in deductions we would have missed!

Just wanted to update after trying taxr.ai from the comment above. I was super skeptical (still paid my CPA) but wanted to compare results. Uploaded our docs and it actually found THREE major deductions my expensive CPA missed! One was related to our home office allocation for the LLC and another was about properly classifying our renovation costs vs. capital improvements on our flip property. The analysis was surprisingly detailed and explained everything in plain English. The best part was the checklist of documents I needed to keep for potential audit protection. Totally worth it and will definitely use it again next year!

If you're getting stuck on any of this partnership tax stuff, you might need to talk directly to the IRS. I know, I know - everyone laughs when I suggest that because it's IMPOSSIBLE to get through to them. I spent 3 days trying to get clarification on a partnership tax issue last year. Then I found https://claimyr.com and it literally saved my sanity. They have this system that holds your place in the IRS phone queue and then calls you when an agent is about to answer. Check out how it works: https://youtu.be/_kiP6q8DX5c For partnership questions especially, talking to a real human at the IRS was way more helpful than guessing. The agent walked me through exactly what forms my LLC needed and explained how to handle our construction loan interest during the development phase (turns out it was different than I thought).

Coming back to eat my words about Claimyr from my skeptical comment earlier. I finally broke down and tried it yesterday after struggling for 2 weeks to reach someone about my LLC's late filing penalties. The system actually worked exactly as described - I put in my number, went about my day, and got a call about 1.5 hours later connecting me directly to an IRS agent. The agent was able to remove the penalties completely since it was our first time filing late. Would've kept getting automated rejections online without speaking to a human. Never thought I'd be recommending an IRS call service but here we are!

Quick tip - make sure you're tracking partners' capital accounts correctly on your 1065. My LLC got flagged for audit because we messed this up. The basis calculations get complicated when you're flipping properties AND holding others for development. Also, if any partner contributed the land or property instead of cash, that creates special basis issues.

Has anyone used QuickBooks for tracking their real estate LLC finances? We're just starting out and trying to figure out the best system.

I went through something very similar when my partners and I started our real estate LLC two years ago. The tax complexity can definitely be overwhelming at first! A few things that might help beyond what's already been mentioned: 1. Don't forget about the potential Section 199A deduction (20% pass-through deduction) - real estate activities can qualify, but there are specific rules about whether your flipping is considered a "trade or business" vs investment activity. 2. For your vacant lot development costs, keep meticulous records of everything - surveys, permits, interest, insurance. These typically get capitalized into the basis of the property until it's completed/sold, then you can deduct them. 3. Consider electing out of the partnership audit rules (Section 6221) if your LLC qualifies. This can save headaches if you ever get audited, as it allows partners to be audited individually rather than at the partnership level. 4. Make sure your operating agreement clearly spells out profit/loss allocations and capital account maintenance. The IRS scrutinizes these closely for real estate partnerships. The learning curve is steep but gets much easier after your first year once you have systems in place. Hang in there!