U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Real Estate
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Reply Start New Thread
 
Old 08-08-2012, 12:22 AM
 
2,770 posts, read 2,043,981 times
Reputation: 2023

Advertisements

I have several rental properties which I own outright.

Property A shows profit

Property B shows profit

Property C shows loss

I have been using the losses in Property C to offset gains in A and B which works out fine.


Now.. let's change this to:

Property A LLC shows profit

Property B LLC shows profit

Property C LLC shows loss

All three are in their own individual LLC


Questions:

1. Can I still use the losses in Property C LLC to off-set profits earned in Property A LLC and Property B LLC?

2. Also given that the three homes are already covered under State Farm renters insurance policies (up to one million dollars per property) is it necessary to convert the homes to LLC?

Thanks for any help with this
Reply With Quote Quick reply to this message

 
Old 08-08-2012, 07:06 AM
 
Location: The Triad (NC)
26,840 posts, read 57,851,863 times
Reputation: 29235
Quote:
Originally Posted by john3232 View Post
Also given that the three homes are already covered under State Farm renters insurance policies
(up to one million dollars per property) is it necessary to convert the homes to LLC?
No. Nor is it advisable.

For the small holding and directly managing LL... insurance is the better choice over an LLC.
Get an umbrella policy that protects your personal assets.
Reply With Quote Quick reply to this message
 
Old 08-08-2012, 08:49 AM
 
2,770 posts, read 2,043,981 times
Reputation: 2023
When is it advisable to put rental property under an LLC?

Also with regards to write-offs can say losses with Property A LLC used to offset gains with Property B LLC?

Or is this not possible given that each property is an individual LLC?

Last edited by john3232; 08-08-2012 at 09:07 AM..
Reply With Quote Quick reply to this message
 
Old 08-08-2012, 09:08 AM
 
Location: Northern MN
3,869 posts, read 12,502,193 times
Reputation: 3540
???
Why all the llc's.their is no tax advantage or liability advantage
or am I missing something.
A LLC is a limited liability company.
Like "Bob's rentals llc"
They all would be under the same llc..

Why the jugging act, let the property that is showing a loss stand by it's self.
If you only had one LLC and all rentals being owned by it you would not have to be worried about it making a profit at least one year out of 5.
Reply With Quote Quick reply to this message
 
Old 08-08-2012, 09:33 AM
 
2,770 posts, read 2,043,981 times
Reputation: 2023
The lawyer I spoke recommended putting each property under an individual LLC.

This way if I were ever sued the other properties couldn't be touched.

I've searched on-line about LLC do appear to be recommended for rental properties but I am having a hard time understanding the benefits if I already have State Farm renters insurance.

Also I am unclear about write-offs and LLC rental properties.

Do the write-offs work same way?

Or once a rental property is placed into an individual LLC does this mean the profits and gains are self-contained and can't be used to offset gains/profits in other rental properties?
Reply With Quote Quick reply to this message
 
Old 08-08-2012, 09:44 AM
 
Location: The Triad (NC)
26,840 posts, read 57,851,863 times
Reputation: 29235
Quote:
Originally Posted by john3232 View Post
The lawyer I spoke recommended putting each property under an individual LLC.
This way if I were ever sued the other properties couldn't be touched.
Approach **another** lawyer and ask what's needed to "piece the veil" of an LLC
Reply With Quote Quick reply to this message
 
Old 08-08-2012, 11:28 AM
 
2,770 posts, read 2,043,981 times
Reputation: 2023
I'll e-mail the lawyer I was in contact with yesterday and explain that until I learn more I think it best to put this (LLC) on hold.

However, does anyone if losses and gains can be used between the properties own if some are in an LLC and some aren't?

I actually own 8 rentals and originally contacted the lawyer about putting the three homes I recently purchased into my trust.

It was at this point he talked about putting the three new properties into an LLC.

He recommend putting each property into their own LLC but for now he would put three in one.

After talking he told me to speak with my tax accountant about the write-offs which got me to thinking: I need to be able use the losses from various properties gains on the others. Will this work if some properties are in an LLC and some aren't?

Again although I have already been billed for his time ($300!!) I only signed the docs to have the properties placed into my trust.

I have not yet signed off on the LLC.
Reply With Quote Quick reply to this message
 
Old 08-08-2012, 04:49 PM
 
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
6,958 posts, read 18,532,188 times
Reputation: 6356
Delaware allows for "serial" LLC's. So you could have the xyz llc 1,2, 3, 4 etc. I think it's way cheaper than any other state as well.

Just because stuff is in an LLC, the profits and losses get reported on your K-1 form to the IRS. Sort of like buying and selling stock, your profits and losses are net to the taxpayer.
Reply With Quote Quick reply to this message
 
Old 08-08-2012, 06:23 PM
 
2,770 posts, read 2,043,981 times
Reputation: 2023
Quote:
Originally Posted by DMenscha View Post
Delaware allows for "serial" LLC's. So you could have the xyz llc 1,2, 3, 4 etc. I think it's way cheaper than any other state as well.

Just because stuff is in an LLC, the profits and losses get reported on your K-1 form to the IRS. Sort of like buying and selling stock, your profits and losses are net to the taxpayer.
O.k. thanks.

Outside of using a few additional IRS forms it seems the write-offs work the same.

How about taxes? Would I be paying twice with an LLC

Once for the LLC and second for myself?
Reply With Quote Quick reply to this message
 
Old 08-08-2012, 07:53 PM
 
Location: Phoenix AZ
5,920 posts, read 10,440,488 times
Reputation: 9226
Quote:
Originally Posted by john3232 View Post
O.k. thanks.

Outside of using a few additional IRS forms it seems the write-offs work the same.

How about taxes? Would I be paying twice with an LLC

Once for the LLC and second for myself?
You will only pay taxes once, as they pass through to your personal return.

A bigger issue is that your insurance coverage could be affected if the properties are in an LLC.

Some insurers won't write a policy at all, some will require a "commercial" policy for property in an LLC.

Best to ask your agent before moving things around.
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Real Estate
Follow City-Data.com founder on our Forum or

All times are GMT -6.

2005-2018, Advameg, Inc.

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 - Top