I got a new Series LLC (Delaware), and I am closing on a short sale on Nov 6th, and the property will go into the LLC as its own series. I plan to put section tenants 8 in the house. The short-sale property is currently in my name. I want to put it under the LLC for asset protection. So, I have a couple of questions for those knowledgeable:
1) A series only exists in an operating agreement which is on my computer and that's it. I got mixed advice on whether each series needs an EIN or not. I prefer not so that I don't have to file individual series Federal taxes. Can I get an EIN, and not file Federal Taxes for the Series? I will still file the LLC taxes off course.
2) Are we required by law to use a specific format for the name of a series that is holding assets? For instance, do I need to call the series "Real Estate llc" Series"Address" OR can I just use the address as the name - which is a proxy for whatever the heck I want?
3) Section 8 requires "Landlord" is the landlord (a) the owner of the property or (b) the property management company? The property management company is a series within the LLC
When I place sect8 tenants, I list my mgt co as the payeee with that EIN and the property owner is either myself with good insurance, if it's a house, or my LLC if it's an apt building 5 units+.
Hard to tell if you are short-selling the house to yourself? It's currently in your name, but...
I don't put little houses into entities. Others hopefully can help you with that mess. Good luck!
@Peter Forrest you should talk to Scott Smith with Royal Legal Solutions( http://www.royallegalsolutions.com ). He specializes in this area and discussed the use of Trusts on a recent podcast and in a forum post at https://www.biggerpockets.com/forums/311/topics/156663-one-weird-legal-trick-to-protect-your-assets-better-than-an-llc
@Steve Vaughan many thanks! I am closing the short sale under my name for a variety of reasons. I will then refinance it into the LLC.
@Brian Tome Many thanks - great blog/podcast. Do you know anyone in MD/DC/VA who does this type of legal work?
Technically you need a lawyer who practices in the jurisdiction where you set up the LLC and or Trust. For a number of reasons, you should consider incorporating an LLC in Delaware. It is far and away the most favorable jurisdiction for incorporating any number of business entities. I don't know any Delaware attorneys in the DC area, but all of what you will need can be done via telephone/mail/email/fax.
For this kind of work I would recommend Scott Swenson. His integrity and expertise are second to none. He is a highly respected member of both the Delaware and Maryland bars and recognized as one of the best lawyers in America within his field. His contact information and credentials can be found at:
In regards to tax filing on series LLC this is what an accountant told me:
IRS says that each series “cell” is treated as a standalone entity for federal tax filing purposes. So one cell could have 2 members and would file a return as a partnership (unless it elects to be taxed as a corporation) and another cell of the LLC could have one member and be a disregarded entity where the income is reported on the single member’s tax return (unless it elects to be taxed as a corporation). I suppose it may be possible to file one TX Franchise Tax return, but not one federal tax return.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing