Hi, I have three properties and going for my fourth. Since I do not have that many properties right now, should I use my LandLord status for right offs and not change my status to become an LLC. My accountant is advising me to right everything off as a LandLord. Would that allow me to maximize my right offs and get to invest more of my money since I am a new investor with few properties?
Thanks,
PR
Your landlord status will do nothing to protect your assets. An LLC will protect your personal assets, a land trust will protect your real properties. Good luck.
Da Wiz
All business expenses are deductible, whether within an LLC or as a sole proprietor. The choice of entity has no bearing on the abilty to “write off” anything.
However, as da wiz notes, asset protection is another serious consideration. No one should ever be owning/managing properties as a sole proprietor.
Mark Wagner, CPA
You can configure what the rent / income you feel better. Common rent / income varies from 25 to 40% depending on location. You always can ask for any additional sources of funds that may be available to pay the rent, such as student loans or Section 8 or child support.
Me owning my proerties under an LLC did not effect my taxes or write-offs in any way whatsoever.
There is paperwork to establish and maintain the LLC that you would not have as an owner-landlord. If your LLC elects to be treated as a partnership or as a corporation, then you will have extra tax returns to file as well.
Benefits of limited liability are doubtful and may be non-existent if your LLC is a disregarded entity LLC and you also manage the properties yourself.
I’ll go a little further than Dave and say there are no limited liability benefits for a disregarded LLC. A creditor needs a mere $11,000 against the single member to force him into involuntary bankruptcy where the LLC will be liquidated to pay the judgment. That is a very low bar to reach. In FL, bankruptcy is not required to seize the LLC assets.