Q: Benefits of transferring rental property to LLC for tax purposes
I own a rental property and I'm considering transferring it under my newly formed LLC. I haven't consulted anyone about this yet. My main concerns are tax benefits and business advantages. Specifically, I want to know if there would be more tax advantages or potential expense write-offs (such as remodeling costs like painting, carpet, and tile work) under an LLC compared to keeping the property in my name. I currently own only this property but plan to own more in the future.
A: You would be well served by presenting this situation and you growth plans to a Certified Public Accountant. This is the nature of their business, understanding the IRS Regulations and associated Revenue Rulings that actually determine your financial outcome.
A:
Have you tried reaching out to the Nebraska Business Development Center through the University of Nebraska? You can request a free consultation to learn more about business planning and development:
https://www.unomaha.edu/nebraska-business-development-center/business-start-and-growth/plan-develoment.php
You will likely want the help of both an attorney to form the business and a CPA to help guide you more specifically regarding tax strategies.
A: I was just talking with a CPA on this very issue today. There are, in my opinion, a number of reasons to consider an LLC with the leasing of real property. First reason, however, is limited liability and protection of personal assets. Second, while an LLC does not have corporate formalities, the IRS would allow you to elect to be taxed as either an S Corp or C Corp. Both have advantages over being a sole proprietorship. An LLC may also be helpful for branding and selling the business someday. In short, for lots of property owners an LLC often pays for itself. We do packages at $600, including the filing fees, operating agreement, SS4, and advisory letter.
Justia Ask A Lawyer is a forum for consumers to get free answers to basic legal questions. Any information sent through Justia Ask A Lawyer is not secure and is done so on a non-confidential basis only.
The use of this website to ask questions or receive answers does not create an attorney–client relationship between Justia and you, or between any attorney who receives your information or responds to your questions and you, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask A Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.
Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises, or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.
