Q: Can I exclude an investment property from my income and expense declaration?
I am thinking about transferring an income property into a single-member LLC and having the single member be a trust. The property revenue would be deposited into the LLC checking account and there would be a separate tax return filed for the trust. I would not receive income from the property or file it on my taxes however the loan will still show on my credit report. Could I legally exclude the rental income from my income and expense declaration?
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A:
Under California law, when filing an Income and Expense Declaration (Form FL-150), you are required to provide a complete and accurate disclosure of your financial situation, including all sources of income and expenses. This includes any income or expenses related to investment properties.
Specifically, the Form FL-150 instructions state:
"You must list all sources of your income and all your expenses, in addition to any other required information. Include all nontaxable income even if it is not included on your tax return. If your income is from a business, rental property, or self-employment, keep a copy of your last year's tax return and profit and loss statements to assist you in completing this form."
Therefore, if you own an investment property, regardless of how the title is held or whether the loan is in your name, you are required to disclose the income and expenses associated with that property on your Income and Expense Declaration.
Failing to disclose this information could be considered a misrepresentation of your financial situation and may have legal consequences. It's important to be transparent and honest when completing the form.
If you have specific questions about your situation, it's best to consult with a qualified family law attorney in California who can provide guidance based on your individual circumstances.
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