I'm closing on a property soon to start using it as a short term rental and need to set up my LLC but I want to make sure i have the best protection and have the best tax strategies? Does anyone have any contacts or people or companies they have used?
Hey @Feras Majeed, just curious, you are setting up the LLC to move the STR into it?
Yes. Also to form a partnership between my partner and I then we will run the STR out of that LLC. Not sure if that's how it works. That's why i'm trying to find a professional who does this lol
Hey @Feras Majeed, just curious, you are setting up the LLC to move the STR into it?
Yes. Also to form a partnership between my partner and I then we will run the STR out of that LLC. Not sure if that's how it works. That's why i'm trying to find a professional who does this lol
Ok, so, if you used a conventional mortgage, the transfer will trigger the due on sale clause. Most conventional mortgages have them. That will mean you need to refinance with a commercial loan. Maybe put a bit more down and pay a bit more interest.
So if you are prepared for that then it can work. If not, then just get good insurance and keep up on the maintenance and you should be fine.
Congrats on the upcoming closing. For a short-term rental, it is smart to think through the LLC, liability protection, financing, insurance, bookkeeping, and tax strategy before you start operating.
A few key items to review are whether the property should be owned directly by the LLC or transferred after closing, how your lender and insurance carrier will treat the structure, whether you will need separate bank accounts and clean accounting records, and how you plan to track expenses, furniture, repairs, depreciation, and local STR-related taxes.
I would also speak with both an attorney and a CPA before making the final decision, because the legal protection and tax strategy need to work together. Setting it up correctly before the first rental activity can help avoid problems later.
Happy to share general tax/accounting considerations here if helpful.