I'm moving to San Francisco and renting out my Fort Greene condo. Do I have to pay income taxes on the rental payments I get? And how can I minimize the taxes I do have to pay -- should I set up an LLC?

Yes, you’ll have to report the income you make from your tenant, but a LLC is probably not the way to go, our experts say.

If you form a limited liability company, it will likely be a “single-member” LLC -- you’d still have to file a Schedule E, the same form that any apartment owner would use to report real estate-related income and expenses, says Lester Caesar, a Manhattan-based CPA who deals with real estate matters. “LLC limits liability, as stated, [but] the reporting requirement is the same as owning the condo personally,” Caesar says. “You are entitled to the same deductions as an LLC as an individual.”

Additionally, there may be hurdles to transferring the condo ownership to a LLC: Your mortgage or condo by-laws may not allow it, Caesar adds.

Instead, you can offset the rental income by deducting prorated expenses, like common charges, maintenance costs, property taxes, mortgage interest, utilities and an allocation for depreciation of the apartment, he says.

Exactly how the income will be taxed depends on your personal situation. "If you have a plain vanilla return, the income is passive and would be taxed as ordinary passive income," Caesar says. (That's in contrast to active income that you'd earn at a job, for example.) "However, if that person has other real estate income, that income may be offset by other passive losses," he says.

Leigh Kamping-Carder is a senior editor at BrickUnderground.com, the online survival guide to finding a NYC apartment and living happily ever after. To see more expert answers or to ask a real estate question, click here.