We own a rental property in an LLC and last year it made money (yayy). Our CPA gave us the return with K1s for 50/50 distribution to each of us and I assume for the amounts we paid tax on in 2025.
So far we have never distributed any money out of the LLC it is all held in the llc bank account. Initially I wanted to build a buffer for repairs but we are getting to the point that is covered. Long term the intention was to allow rental profit to build up and then use the money to buy another property if a deal arises.
We are blessed to not have to draw the money out due to high day job income and are content to let it grow for the next deal.
My question is does it matter for tax purposes if we do or don't distribute the money? At this point there is a pretty good amount there and I would prefer it in an HYSA so I had thought to open an new "rental money" HYSA and let it accumulate there and only leave enough in the LLC account for operating expenses. Would it matter if we then injected that money back in for another property purchase down the line?
I would assume if we didn't distribute this year based on 2025 k1s we would need to let CPA know so we aren't paying taxes on it again.
I emailed CPA all of this as well but my hunch is either is fine and was curious if anyone here had an opinion either way for whatever reason.
Husband and Wife Owned LLC Distribution Question
byu/varano14 intax
Posted by varano14