LLC? Tax advantages? Write offs?
I usually stay out of detailed LLC threads because a) the practices are unique to state in which they were formed, and b) I'm not a lawyer yadda yadda. But this post couldn't be left alone..... my comments follow the "---" because I don't know how to quote posts.
"ok, so from what I'm reading it seems there is no benefit to an LLC? I was under the impression that it was necessary for many tax benefits. . "
---LLCs are pass-through entities for taxation purposes. There is no such thing as "taxed as an LLC." LLCs are taxed the same way sole proprietorships, partnerships, or corporations (S- or C-) are taxed.
"now correct me if I'm wrong, but from what I've read in order to get tax benefits you need to put the real estate into the LLC, "
---Wrong. See above.
"& to do that you can put it into a land trust "
---you can simply create a warranty deed (or whatever is customary in your location) and transfer from anyone/anything to anyone/anything.
"in your own name that wouldn't trigger a transfer so wouldn't cause the bank to call your loan due, "
---I bet if the bank wants the loan called bad enough, there is language in the mortgage or deed of trust to do so. But I have never researched land trusts, nor do I plan to.
"then mage the LLC the holder of that trust, which wouldn't be a transfer. "
---PA has transfer taxes. Make sure they would be cool with this.
"now as protection you can start a corporation "
---whoa. Don't go starting corporations. Stick to LLCs if you are going to do this. Far less formalities.
"in a state like Wyoming, "
---I'm guess you've been watching some YouTube videos. Search for a post by Jerry W., a Wyoming lawyer, for some on-the-ground perspective here.
"make someone else the manager & have them resign. "
---so who is the manager then? If you have to name the manager in the public records in WY, do you not have to name their successors? I have no idea.
"have the LLC in your state (that's holding your trust) a member of the Wyoming corp. so the Wyoming corp owns the LLC that owns the trust. "
---this is backwards. "Member" = "Owner." If you want the anonymous Wyoming corp (LLC??) to own the LLC in your home state, then the Wyoming entity is the member of the home state entity. Also, you'll have to register foreign entities with your Secretary of State now (or other authority).
"you can have multiple LLCs in the corp. now if someone sure they can only take what's in the individual LLCs. & since the corp is anonymous through Wyoming laws they can't attack the corp & find out what else or who owns it. "
---I personally believe that there is little-to-no anonymity anymore, especially when dealing with legal teams and insurance companies that employ people for the sole purposes of "finding the counterparty." I don't know WY, but the amount of info I can find in public records here in AZ is astounding.
"but your the manager so your getting a 1099 "
---1099'ing yourself should be wholly unnecessary in a single-member LLC, but I guess you could if you wanted to.
"where you can use to write off business expenses. "
---you could write these off anyway. On Schedule E of Form 1040 of your personal tax returns. And Schedule C if you want to get more complex and have an active business. See item #1, where it says LLCs are not taxed any differently than the type of entity that the LLC chooses to be taxed as.
"please spread light if I'm way off here.. now idk how any of this affects getting another loan."
---You could probably get a loan from someone.
Actually @Dan Schwartz, you have nailed it pretty accurately. You have to keep in mind that you are in business to make money. You can focus too much on trying to limit liability when a good insurance policy and an LLC are the most that many folks need. The multi millionaires may need a little more, but you can kill your cash flow and your free time by doing some of these exotic measures. They are hard to keep up sometimes, and can bring their own expenses. Failing to keep them up properly can cause them to to be pierced, and the anonymity doesn't seem likely to me with the things you can do in depositions or interrogatories and other discovery methods.
@Laura Smith, most of the advice you have gotten about LLCs is Frankly hehe wrong. They do not help with taxes, but used properly they can be a very effective tool for protecting yourself from liability. They will not protect from all liability, nothing does that. Yes you can be sued even with an LLC but you can be sued because someone doesn't like the color of your hair, it doesn't mean they will win. LLCs can be very easy to manage. With pass through taxing, and other benefits. In some states they are cheap. Wyoming charges just $100 in fees to set one up, and your annual statements are usually $50. I would never put my personal residence in an LLC, especially if I was married, but that is a matter for another day and tenants by the Entireties. I agree a deduction from one place with the same income to another is useless. Loans can be more expensive for an LLC than personally, and you need to maintain a separate bank account and corporate formalities. There is good and bad to them. Talk it over with a good accountant for the run down. Read up on LLCs in your state as it can vary from state to state. They are not necessary, but they can be helpful and reasonable priced. Good luck either way. Don't let the confusion over LLCs stop you from going forward in investing. Going either route will get you there, waiting to decide will not.