New to Real Estate · CA · Member since 2025 · 2 posts · 4 votes
Hi! I am fairly new to the idea of real estate investments. Just started reading the book on rental property investments. I've heard that I should create an LLC to buy rental investment properties, so I could put them under the LLC. Is that accurate or recommended? Is it better than putting the rental property in my own name? How does that help me reduce my own personal taxes which are high?
CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
1y
@Andrea Andrade No, you don't need an LLC to start buying investment properties, and many investors purchase rentals in their personal name—especially when starting out. The main benefit of an LLC is liability protection, meaning your personal assets are shielded if a tenant sues. However, LLCs do not automatically reduce taxes unless structured correctly.
From a tax standpoint, an LLC doesn’t provide new deductions—rental income and expenses (like depreciation, mortgage interest, and repairs) are deductible whether the property is owned personally or by an LLC. However, an LLC can make tax planning easier if you have multiple properties or elect S-Corp taxation for active real estate businesses like flipping.
Financing is another consideration—many banks prefer lending to individuals, and transferring a mortgaged property into an LLC can trigger the due-on-sale clause.
If liability protection is a concern but you want easier financing, consider strong insurance coverage (umbrella policy) instead of forming an LLC right away. A real estate CPA and attorney can help decide when an LLC makes sense for your goals.
This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.
Lender · Winter Park, FL · Member since 2021 · 737 posts · 412 votes
1y
I'm not a lawyer or CPA, but using an LLC for real estate investments can help protect your personal assets, offer tax benefits, and make getting private financing easier. If someone sues over something related to the rental property, an LLC keeps your personal money and belongings safe. Many private and hard money lenders require you to buy properties under an LLC instead of your own name. It won't automatically lower your taxes, but it can help with business expense write-offs and flexible tax options. If you plan to own multiple rentals or get private financing, an LLC is a smart move, but it's best to check with a lawyer or CPA to see if it's right for you.
Realtor · Atlanta, GA · Member since 2021 · 239 posts · 120 votes
1y
@Andrea Andrade Hey, welcome to Bigger Pockets! I’d like to echo what @John O'Leary said...yes, an LLC can provide tax benefits and keep things separate from your personal assets, but so many investors here on BP don't use one and will even advise against it. It really comes down to how you view risk and asset protection. If privacy and limiting liability are priorities for you, an LLC makes sense. But if you're just starting out, weigh the costs and benefits because some lenders won't finance in an LLC without a personal guarantee anyway. I'm not a CPA or attorney, just my two cents!
Hi! I am fairly new to the idea of real estate investments. Just started reading the book on rental property investments. I've heard that I should create an LLC to buy rental investment properties, so I could put them under the LLC. Is that accurate or recommended? Is it better than putting the rental property in my own name? How does that help me reduce my own personal taxes which are high?
Thank you!!!!!
Nope. Don't need it. Find a property to buy first, then worry about it.
CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
1y
@Andrea Andrade No, you don't need an LLC to start buying investment properties, and many investors purchase rentals in their personal name—especially when starting out. The main benefit of an LLC is liability protection, meaning your personal assets are shielded if a tenant sues. However, LLCs do not automatically reduce taxes unless structured correctly.
From a tax standpoint, an LLC doesn’t provide new deductions—rental income and expenses (like depreciation, mortgage interest, and repairs) are deductible whether the property is owned personally or by an LLC. However, an LLC can make tax planning easier if you have multiple properties or elect S-Corp taxation for active real estate businesses like flipping.
Financing is another consideration—many banks prefer lending to individuals, and transferring a mortgaged property into an LLC can trigger the due-on-sale clause.
If liability protection is a concern but you want easier financing, consider strong insurance coverage (umbrella policy) instead of forming an LLC right away. A real estate CPA and attorney can help decide when an LLC makes sense for your goals.
This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.
CPA| New Clients Welcome| 50 States · Member since 2016 · 430 posts · 93 votes
1y
Hi Andrea, from tax point of view there is no difference holding the property at your name or thru LLC. Before to take a big step, is better to ask an accountant what strategy is best for you.
Hi! I am fairly new to the idea of real estate investments. Just started reading the book on rental property investments. I've heard that I should create an LLC to buy rental investment properties, so I could put them under the LLC. Is that accurate or recommended? Is it better than putting the rental property in my own name? How does that help me reduce my own personal taxes which are high?
Thank you!!!!!
You do not need an LLC to qualify for an investment property loan. It is recommended though, especially for DSCR and Hard Money Loans since some lenders may require closing in an entity.
Attorney · Las Vegas, NV · Member since 2025 · 69 posts · 91 votes
1y
Hi Andrea,
Welcome to the world of real estate investing!
Setting up an LLC for your investment properties is something that I strongly recommend for all of my clients to provide them with asset protection.
LLCs can help shield you from personal liability if a tenant were to ever sue as well as offer protection against creditors in case of a personal judgment through charging order protection, when the LLC has been structured appropriately. With the property in an LLC, if someone were to sue the property, they could only go after the assets in the LLC and not anything else (again assuming you did not guarantee anything personally and the corporate veil has not been pierced).
Also, depending on the structure, you can keep your name off the public record as the owner of the property and even as part of the LLC. For my clients, I recommend that they place the properties in an LLC that has been formed in the state where the property is located and have the member of that LLC be a Wyoming LLC. This provides for both anonymity as well as charging order protection.
If you took out a loan to purchase the property, then you may need to close in your name. In these scenarios, depending on the type of loan, you may benefit from a land trust. Depending on the terms of the mortgage, transferring the property to an LLC may be considered a sale, thus triggering the due-on-sale clause. However, putting it into a land trust first avoids triggering the due-on-sale clause. And this way, you move the property out of your name.
Setting up an LLC may not provide for any different tax benefits than you would receive if it was owned in your name, however, if you are planning on doing active real estate investments, then a C or S Corp may be beneficial for you.
Note: This information is for educational and informational purposes only and does not constitute legal, tax, or financial advice. No attorney-client, fiduciary, or professional relationship is established through this communication.
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