Los Angeles · Member since 2019 · 12 posts · 2 votes
Hi All -
Anyone have experience creating an LLC for building and managing a new ADU construction? Did you find it beneficial vs not creating the LLC or any type of pass through entity?
Listed some of the tax benefits you can receive while building an ADU and once the ADU is built from my research. Happy to learn if there are other tax benefits. Tax Benefits While Building
- Create an LLC and pay start up costs through the LLC (architect fees, permit fees, etc.). You can also deduct the cost of creating the LLC. Up to $5K (Source: https://www.adugeeks.com/post/...)
Tax Benefits Once Built
- Deduct depreciation and cost of maintaining the property
Anyone have experience creating an LLC for building and managing a new ADU construction? Did you find it beneficial vs not creating the LLC or any type of pass through entity?
Listed some of the tax benefits you can receive while building an ADU and once the ADU is built from my research. Happy to learn if there are other tax benefits. Tax Benefits While Building
- Create an LLC and pay start up costs through the LLC (architect fees, permit fees, etc.). You can also deduct the cost of creating the LLC. Up to $5K (Source: https://www.adugeeks.com/post/...)
Tax Benefits Once Built
- Deduct depreciation and cost of maintaining the property
- Deduct mortgage interest if a loan is taken out
While I am not an accountant, I do not see where it would save you much, if any money at all. I can expense all the fees you mention without creating an LLC. You can also deduct depreciation, maintenance, and mortgage interest regardless of business structure.
Sole proprietorship vs. LLC is more based on protecting personal assets from business liability.
@Ronak Patel Hi. Did you end up creating an LLC for the ADU you built? I am asking the same question and would love hear your experience with it and how you went about it in the end and if it was all worth it.
Anyone have experience creating an LLC for building and managing a new ADU construction? Did you find it beneficial vs not creating the LLC or any type of pass through entity?
Listed some of the tax benefits you can receive while building an ADU and once the ADU is built from my research. Happy to learn if there are other tax benefits. Tax Benefits While Building
- Create an LLC and pay start up costs through the LLC (architect fees, permit fees, etc.). You can also deduct the cost of creating the LLC. Up to $5K (Source: https://www.adugeeks.com/post/...)
Tax Benefits Once Built
- Deduct depreciation and cost of maintaining the property
- Deduct mortgage interest if a loan is taken out
While I am not an accountant, I do not see where it would save you much, if any money at all. I can expense all the fees you mention without creating an LLC. You can also deduct depreciation, maintenance, and mortgage interest regardless of business structure.
Sole proprietorship vs. LLC is more based on protecting personal assets from business liability.
What route on the ADU did you take? Were you the GC or did you get a prefab or just build stick? I am looking at putting one in as well and trying to go the most economical way.