A few questions in regards to a LLC and a real estate business

[Christopher Gardino]

I have read that in using a LLC, one can create personal protection against a real estate property in the case of lawsuit. Is this true in regards to a primary residence and should I be looking to purchase my first property under a LLC or under my own name?(My first property will hopefully be a duplex in which I live in one unit and rent the other)

My second question is in regards to starting a business for real estate. Is it possible to start a real estate business in my primary residence for the property I will be moving in to? I read the great tax benefits for deducting business expenses and am curious as to whether investing in a property and renting it could be considered a business. In so would it could be eligible for these deductions?

Thanks,

Chris

[Dave Toelkes]

@Jerry W.

Your suggestions only apply to an active income activity. I believe the OP asked about a residential rental activity which is a passive income activity. His second question seems to confuse the issue, but I interpret his "business" as a rental that he self manages.

If my interpretation is correct, then I don't see any tax deductions related to a business entity "start up" that would apply (with possible exception of registration cost), or, that could not be taken on Schedule E if the property were held in his own name.

Since there is no self-employment income tax on rental property income, a sub-S corporate entity would not the best title holding vehicle for a rental property and the OP could actually lose some tax benefits that accrue to a residential rental property activity. LLC (partnership or sole proprietor) registration fees are perhaps the only deduction I see that might apply. However, if the OP is going to self-manage, there really is no benefit to be gained from the LLC at all, so, no need to incur that expense in the first place.

Just how I see it.