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Forums » Tax, Legal Issues, Contracts, Self-Directed IRA » Sole or Multi LLC

Sole or Multi LLC Subscribe to Sole or Multi LLC

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Forum_avatar_avatar-toedaline

Icon_minipost Mar 15 '07, 07:20 AM

Need help on what type of LLC to form. My wife and I jointly own rental properties and would now like to get some protection from LLC. In looking up information I see that you can either form a sole owner or multi-owner. Is there any advantage to one versus the other?

Edited: 06/26/2010 at 03:25AM


Jeff Takle

Real Estate Consultant · Somerville, Massachusetts


Forum_avatar_avatar-takleberry

Icon_minipost Apr 07 '07, 08:59 AM

Probably depends on your situation. You won't get any " more" liability protection using one over the other, if that is the question. Either the LLC holds up in court as a legitimate business, thereby shielding your personal assets and those of your wife, or it doesn't.

Filing taxes does get more complicated with a multi-member LLC b/c then you have to file a separate return and send out K-1 forms to each member by such and such a date. Single member LLCs can just file a Schedule C with your personal taxes and then an " informational tax return" with the fed and state. It is somewhat easier to do.

A good rule of thumb is SIMPLE IS BETTER. Given two choices with equal outcomes, choose the simpler one.

Also, before you leap on the LLC wagon, it may be worth your time to research putting the properties instead into a trust. Should one of you die, and the assets are held in an LLC, you can get clubbed with the estate tax and/or the value of the home will count towards your $2million cap. People do die and using a trust can provide both the liability protection you are seeking, and some specific estate tax benefits as well. Added bonus.

-Jeff

Edited: 06/26/2010 at 03:29AM


Account Closed


Forum_avatar_avatar-rei

Icon_minipost Jun 27 '07, 05:45 PM

Originally posted by "toedaline"
Need help on what type of LLC to form. My wife and I jointly own rental properties and would now like to get some protection from LLC. In looking up information I see that you can either form a sole owner or multi-owner. Is there any advantage to one versus the other?

If you and your wife are going to be members of the LLC you have no choice in terms of a sole member. A couple is 2 people when it comes to LLCs. If you wanted to each have your own LLCs and split the property up or have one LLC with the other person having no stake then you can use a sole LLC.

You can have 2 members and elect to have the LLC treated as a partnership for tax purposes. You just can not have an LLC with 2 members and expect sole member treatment.

John Corey

Edited: 06/26/2010 at 03:42AM


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