Houston, TX · Member since 2009 · 9 posts · 0 votes
First, let me introduce myself. I was a mortgage loan officer for several years, then moved in auto finance. I was laid off about a year ago, and work in accounting at our Family business, a commercial Heat Treating shop( service company for oilfield parts).
For estate planning, we started a family LP about a year ago. The money in that Lp is funding the rent houses we are getting into. My old boss, and the two other investors I know, use disregarded llc's for their property(they dont have similar LP's, just use the llc's as pass throughs to their personal return).
Should we buy the homes in the LP name and leave it at that, or start a llc within the lp to hold the homes?
I assume an addtl llc would help protect the other assets within the LP, which are substantial.
You are correct, the benefit of having the LLC in the LP would be to protect the other assets inside of the LP. From a tax standpoint there would be a disadvantage having the LLC inside of the LP if you are looking to capture the depreciation on the holds within the LLC.
I think you are on the right track with the LLC but from a protection standpoint you would be in the same position if you and/or family members were the members of the LLC plus you would have the ability capture the depreciation on the properties.
OK, so, no matter what, any entity will have the same members. I just want to protect the LP assets. So, if I understood, you are saying that we need an LLC, but outside of the LP?
So, we will just have to deal with an extra return each year?
That's correct. You definitely do not want to place the rental property directly in the LP because the other assets in the LP would be at risk. Have the LLC independent of LP even though you will have to file an additional return.
Well, I got some resistance on adding another return. Things are complicated enough as is. I think we are just going to make sure we are VERY well insured with a larger than normal umbrella liability policy.
If you guys see a problem going in this direction, let me know.