For purposes of Asset Protection, is putting investment rental property in an LLC a good idea? If not what do you do to protect your assets in the event of litigation? Thanks for your time.
It is a good idea, but not the only idea. Or, in other words, if you think that's all you need, and not do the other parts of the protection (insurance, management, maintenance, corporate formalities and accounting, etc.) then is like putting an iron front door but leaving the windows open.
Here, a diagram to help you with this question:
I don't think it's always as good of an idea as people say it is. Every situation is different, so you should consult with your accountant (at a minimum). But here's more on why I didn't go the LLC route-
There's tons in the comments as well.
Thank you everyone for your response! Ali Boone thanks for sharing the link especially helpful to read the responses.
Originally posted by @Dennis M. :
If you have a business running rentals and have more than 5 units I would do it . Basically if you plan to expand out I’d do it ,if you plan to do rentals on the side or for more of a hobby then having the properties in your name is perfectly fine too . A lot of people seem to not get an llc because of the expense in some states it’s like 800 bucks a year to maintain it so they push just using your name instead of a business and then the other side says they have an llc for tax reasons when the reality is at this level being a single owner there is really no tax savings .the best argument for an llc is for asset protection . It may not be perfect but it’s one more wall of protection in the event of legal problems
there really is no asset protection for single member.. those get pierced like an arrow going through a paper bag.