I currently rent and have no real estate to my name. An LLC i'm a minority member of is undergoing an acquisition and my idea for planning for my tax bill is to start a new LLC just for real estate, and have the LLC purchase a unit or property outright to reduce the amount i can be taxed on and then live in the property. The plan would be to then use that LLC to buy any future properties/land for myself or rental properties. Has anyone ever done this? Would an accountant be the best person to ask about this.
Putting properties in an LLC is not a tax strategy. Your taxes are computed and reported exactly the same as a single member LLC vs having it in your own name.
An LLC is for asset protection and you'll want to talk to an attorney as to whether it's a good plan for you.
Hint: With no other significant assets in your name, this is probably not beneficial to you.
An LLC buys you an annual maintenance fee and, if you're determined to buy the property in an LLC, usually a higher interest rate and higher down payment requirements.
@Dylan P. I am an AP attorney. AP is tax neutral. You may have some tax benefits from a LLC, but that is secondary to the AP part of it.
Purchase the property in your own name first. That way you get a better finance rate. Then transfer the property into your LLC or Series LLC via a legal trust that is a member of the LLC/SLLC. Then you are creating anamynity and asset protection.
@Linda Weygant is partly correct on the CPA tax side of things. But if you are investing, you are a target so it does not matter if you own one property or 100 properties. And it is the small guy like you with 1-5 properties who is not set up who has the most to loose. I prefer Series LLC's if you are going to be investing in more than one property. It is streamlined for filing just one tax filing, but allows to create child series for each asset that are treated for liability purposes as their own entity. This means that if series 1 house is sued, they cannot reach into series 2 assets to cover damages.
Have this set up by an experienced attorney and talk to your CPA. @Scott Smith is a very experienced an knowledge attorney on Series LLC and AP. If you don't reach out to me, definitely consider reaching out to Scott.