Spec home liability insurance and taxation
Good evening everyone!
I am starting out a partnership with a local builder to build speculatively on lots that I purchase outright. The builder is giving me a discount on the price of the build and I am in turn agreeing to use them solely for these builds, where they will make money in volume. I plan to do 1-2 a year if I can find land that makes financial sense to both of us. My builder carries builders risk and liability. My insurance company has told me that, while they would insure a project like this from a liability standpoint, eventually they would see me doing this frequently and see it as a business and would direct me to commercial liability insurance. I really would like to know what options I have to cover me liability wise on the lot that I own, during construction, and after construction while the house is on the market.
Would it be worth creating a separate LLC for each of these properties and then obtain liability insurance for the LLC? Would that cover a trespasser who was injured? Would some sort of commercial general liability insurance be better suited for this endeavor?
Additionally, if I were to create an LLC, would I be able to avoid self employment taxes? This will solely be a side venture and I will maintain a well paying day job where I expect to pay off SS before the end of each year. I ultimately want the profits of all the builds to be taxed as ordinary income additional to my W2. I do not plan on holding and do plan on selling ASAP.
I appreciate any help and insight into these questions and look forward to reading different perspectives!