Investment property

I own my own home, vacation property(vacant lot), rental home, and in the process of purchasing another rental home. I’ve been told to set up an LLC or multiple ones. Is this the best way to protect my assets and benifit for tax purposes.
Also do I quit claim the properties over to the LLC, while the mortgages stay in my name. I live in WA state.
Any help will be appreciated!!

Hi mrg,

An LLC will protect your personal assets, but leave the real property partitionable and subject to liens and encumbrances. Place your property in a land trust (revocable, inter-vivos living trust), then take title in your LLC and you’re covered. As long as you have an unrelated co-Beneficiary, you are armor plated. Also, if you are sued, your Trustee will defend your interest in court as he has the title. There is no need to “hide equity” as the trust cannot be penetrated. It’s that simple. Good luck.

Da Wiz

in regard to asset protection, the LLC will protect you against liability, and may have merits with the “personal property” statutes that some people talk about, but it can and will be attacked by lawyers and you will still have to pay to defend the lawsuit, especially if you have assets with equity.

Here is where the problem exists…a lawyer will most likely take on a case if he knows he can get paid. if there is nothing to pay him, he will either refer you to someone else or he will say that you do not have a case, or he will ask for an exorbient retainer to take on the case.

So if you have no money to pay the lawyer his exorbient retainer, and therer is no equity in the property to go after, they will look to the assets of the owner. If the owner “has no assets” there is no Pay Day for the lawyer.

you should ask yourself how do I show “no Assets” and show that the property has “No Equity” and how do I minimize my liability and my profile.

An LLC will accomplish some of your protection strategy but not all of it.
you will still need to minimize your profile and strip the equity out of the property (or at least show that it has no equity) to truly bulletproof your assets from any lawsuits.

you could use a “friendly Lien” to PROTECT your equity in the property. that would accomplish the equity problem, but you will need another corporation that will protect your privacy to place the lien on the property. Remember, you do not want to “Own” anything. you merely want to “Control” the assets or corporations.

ask yourself this simple question and maybe you will understand what I am trying to show you … “if you get sued can the judge take your neighbors’ house?”

as for tax purposes, look to mcwagner, he is the LLC Tax expert. He should be able to give you the appropriate advice on that issue.

As a general rule, an LLC is tax neutral with regard to your personal federal income tax return. That is, your tax liability stays the same with or without the LLC in place.

For estate planning, however, both a trust and LLC are title holding vehicles that bypass probate, but not estate taxes. If estate planning is a primary consideration, you may consider putting your primary residence into a revocable trust and your investment property into one or more LLCs.

John Hyre has suggested that you limit the amount of equity in your LLC to $250K. If you have more property, establish another LLC.

Thank you all for your comments. This forum is excellent, I have been reading through past questions and comments, what an excellent source
for info! Thanks again,


excellent posts from everyone. The only thing I can add is that you should use a general deed, and not a quitclaim, if you go that route.

i thought that i read here—that since it is difficult to get a loan in a LLC—the next best thing is to quitclaim the LLC then into the landtrust…what is this about a general deed. thanks

A quit claim is not a conveyance of property, it just removes you from property (quit the claim?). If you and I own property I can quit claim it to you (get out of it, I no longer have interest in it). But if I want to convey it to you I need a warranty deed.

general warranty deed :

Definition: A general warranty deed is a type of deed where the grantor (seller) guarantees that he or she holds clear title to a piece of real estate and has a right to sell it to you. The guarantee is not limited to the time the grantor owned the property—it extends back to the property’s origins.

Important portions of a general warranty deed include,

* The grantor states there are no hidden liens or encumbrances on the property. In other words, there are no debts or holds other than those that are obvious in public records.

* the grantor declares that he or she is the owner of the property and has a right to sell it to you.

* The grantor guarantees that if the title ever fails he or she will compensate the grantee (new owner) for any losses.

  That guaranteee might or might not be helpful, because the grantor may be dead or unable to follow through on the promise if title problems are found in the future.

Most people hire someone to perform a title search to determine if there are title problems that must be resolved before they purchase a property.

Quit-claim Deed:

A Quit-claim Deed is a deed that operates to release any interest in a property that a person may have, without a representation that he or she actually has a right in that property. For example, Sally may use a quit-claim deed to grant Bill her interest in the White House, in Washington, DC, although she may not actually own, or have any rights to, that particular house.

isn’t that what I said?

no Mark,

actually you said:

‘A quit claim is not a conveyance of property, it just removes you from property (quit the claim?). If you and I own property I can quit claim it to you (get out of it, I no longer have interest in it). But if I want to convey it to you I need a warranty deed.’

my point was illustrationg a more in-depth explanatory description.

someone may have a situation that requires a "warranty deed " over a “quitclaim” bercause of the chain of title issues that may arise. my post illustrates the difference between why you may want a seller to guarantee the deed and title.

The grantor guarantees that if the title ever fails he or she will compensate the grantee (new owner) for any losses.

that might be important in such a case where a claim on the title arises and there may be several thousands if not hundreds of thousands of dollars involved. maybe you would be happy paying that yourself, but if I Icould get someone else to pay because of a warrantee deed, then I have thus protected myself.

In practice, when you convey title by warranty deed aren’t you guaranteeing the title. In the event an undiscovered title defect compromises your buyer’s ownership, wouldn’t you be sued by your buyer?

If so, wouldn’t you then have to (in turn) sue the individual from whom you received title by warranty deed? Meanwhile, you have to deal with an action to recover the money paid to you for the property you sold.

Isn’t this why we buy title insurance?

Gee, I thought his question was only about conveying a property to an LLC. Guess I missed all that other stuff.

Regarding chain of title, I assume that clear title was received upon purchase by the individual. While there would be no title insurance policy on the conveyance to the LLC, nothing has happened that would cloud the title. If a defect were found, the individual would have a title policy from his purchase to turn to, no?

Correct me if I missed something, I place all my properties in a land trust, (living trust), name a co-beneficiary unrelated and transfer titles to the LLC using a general deed.
I also read in another post that getting liability insurance for the LLC is something to think about doing.
Also, say I purchase another property sometime soon do I put it into the same land trust? and since the LLC is holding 4 titles, start another LLC?

Thank’s Mark G.


I was responding to Redwing’s comments. He seemed to infer that if he received title by warranty deed, then transfers title by warranty deed, that he has no financial liability in the event an undiscovered title defect takes the property away from his buyer.

I was just asking whether he would in fact have direct liability to his buyer and would in turn seek to recover damages from his seller. Title insurance makes it easier – the title insurers will fight it out behind the scenes.

Even so, I think Redwing will still be liable for the difference between his title insurance coverage (his purchase price) and the price his buyer paid.

Just asking Redwing to clarify what his position would be in light of his comments.


You mentioned placing all your properties in a land trust. I recommend never placing more than four properties in a single land trust. Reason: if you sell or refi one of them you will very likely have to dismiss the trust, refi or sell, then reinstate the trust. The only time I would place more than one property into a single trust would be if you were holding on to them for a considerable period of time. Otherwise, I recommend one trust per property.

Da Wiz


I think you’re right. If selling to someone else, I would consider a title policy imperative. Not so much so when simply conveying to a “friendly” LLC.