Hello I recently bought a house hack and have two housemates moving in at the end of the month. I was considering getting an LLC for signing the contracts/property management. Is this recommended, or should I just get an umbrella policy? Would I be able to write off as much taxes if it's under the LLC? My main concern is a liability, but I don't have much in way of personal net worth. If I don't get an LLC, am I fine with an umbrella policy and a separate bank account? Any help appreciated!
Hello congrats on the house! Many house hack and do not have LLC. I made a seperate checking account for escrow and bills. Living at the property, you can mitigate potential liabilities (ie make sure the snow is shoveled and put salt on the ground). Yes umbrella policies work. Maybe someone else can chime in to confirm tax info for a PM LLC for your own house.
Congrats on the house-hack! It's a great way to build wealth!
As far as the LLC, you don't need it for tax purposes so it would only be for liability. However, as you mentioned, you don't have much in the way of net worth so I personally wouldn't worry about it.
Even if you do get an LLC, you have to treat it as a separate entity to maintain the effectiveness of the liability protection. Otherwise, you'll "pierce the vail" and it will be useless.
Best of luck!
Forget the llc, too many disadvantages. It won’t help you with liability because You are the owner anyway (liability flows Uphill). Just get good insurance and carry on.
Check your local and state law. You might lose your homestead status for property taxes if the property is owned by an LLC.
LLC's are normally created to hold business assets. The purpose is to separate business and personal assets so your business does not jeopardize your personal assets.
The issue with a house-hack is that it is also a personal asset. you want to have a discussion with an attorney to see if a house-hack will help your situation.