Author Topic: Housing Real Estate in an LLC  (Read 171 times)

markporter

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Housing Real Estate in an LLC
« on: October 06, 2017, 01:18:56 PM »
Does everyone do this?  My attorney, quite a few years ago, recommended getting an Umbrella Insurance policy in lieu of using an LLC to help reduce personal liability.  Curious what others are doing/have experienced.

cfoleverage

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Re: Housing Real Estate in an LLC
« Reply #1 on: October 16, 2017, 11:20:17 AM »
Holding Real Estate in a LLC is quite common, but probably not as necessary as it is often hyped up to be. I currently own 2 single family rentals and hold them in my personal name, not an LLC. If my rental activities increase, I might look into one again, but for now prefer the approach recommended by your atty to use an umbrella policy to reduce liability.

I'm a CPA in TN, and this is how I handle my personal investments to avoid the minimum LLC filing taxes and fees.
« Last Edit: October 16, 2017, 11:21:53 AM by cfoleverage »

Maccountant

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Re: Housing Real Estate in an LLC
« Reply #2 on: November 15, 2017, 11:21:21 AM »
Usually the big sticking point with placing a rental property in a LLC is financing on the property.

Typically if the property is mortgaged the bank will disallow a transfer of title of the property. You signed up for the mortgage, so they want you to hold title to the mortgage in case things go sideways.

If the properties are owned free and clear, then it's just a matter of transferring title of the property from your name into an LLC. There are formation costs and your state may charge an annual LLC franchise fee, but otherwise maintaining an LLC is not too expensive. You'll have to see what your state requires exactly.

If the extra shroud of legal protection offered by a LLC helps you sleep at night it might be worth it. If not then continue to carry adequate insurance at a minimum.