To create an LLC or not...
We are in thinking about purchasing a four family residence where we will live in one unit and rent out the remaining 3. I wanted to know from fellow brownstoners out there how many of you have purchased your properties through LLCs? We are thinking about doing the same, but we weren’t certain if it…
We are in thinking about purchasing a four family residence where we will live in one unit and rent out the remaining 3. I wanted to know from fellow brownstoners out there how many of you have purchased your properties through LLCs?
We are thinking about doing the same, but we weren’t certain if it is the best course of action. We want to protect ourselves, but we also want to optimize our tax position.
Please share any similar experiences that you may have.
Go to http://www.nolo.com
Nolo is owned by a bunch of ex legal-aid attorneys who went into the self-help book business.
All their books are written by knowledgable attorneys.
The books cover most subjects including llc.
All the books are wrtten in simple english.
if you don’t have the money to buy the book, try the public library.
Did anyone mention you can do a 1031 when you sell.
http://www.1031.org
to 12:24pm and OP
If you can tie your homeowners and car insurance together with the same insurance company, they will gladly give it to you.
You will save a bundle in addition to the umbrella policy being inexpensive.
The only thing I would worry about is losing the capital gains exemption when/if you sell. Unless you really think there are people out for your money, just get an umbrella policy.
I chose to buy my 3 family house as a LLC. I did this only because I am in a high risk profession (obstetrics) and want to keep my personal assests protected.
Unless you have a compelling reason I would avoid an LLC. Everything costs significantly more – homeowners insurance, cost to create and maintain LLC, and less tax benefit!
OP here: After posting this, I met with my attorney and talked to my mortgage person. with regards to the latter, the rates are the same so long as I am the sole member of the LLC at close.
My attorney seems to think that the llc will offer significant increase protection in the event that someone ever wants to sue me and/or the LLC. My accountant also mentioned that there are different levels of tax beneifits, the llc will more than likely incur significant losses (mortgage, taxes, insurance, utilities, etc.) with are then deductable. I need to speak with him further on this though…
If you want to do this, talk to a tax accountant. Anything else is unnecessary, except perhaps for common sense and an ability to deal with people (tenants, and don’t treat ’em like they’re about to rip you off,) and I speak as a landlord of 3-unit building(s) for over 20 years.
In NYC, LLCs are taxed as general corporations, so you would have to pay NYC general corporation tax, state franchise tax and the MTA surcharge.
Is an LLC better then if you have cash and don’t need the mortgage?