STR Set up Questions! LLC, furnishing expenses, etc.

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STR Set up Questions! LLC, furnishing expenses, etc.

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Member since 2024 · 3 posts · 0 votes

Hi, I'm considering converting 1 unit of my duplex in to a STR. I currently live in the unit that I will be converting into a STR. I'll be moving into the other unit.

1. Do I need an LLC in order to claim tax benefits for STR?

2. Can I create an LLC just for running the Biz/managing aspect, but not transfer my property into the LLC?

3. How does moving my property to LLC affect how I can get HELOC, refinancing, selling the house?

4. I don't plan on expanding my portfolio, is it even worth getting an LLC?

5. Since I am converting my Primary Residences into a STR MID-YEAR, does that go beyond the personal use days or does it start counting after STR service starts?

6. I'll incur start up cost setting up my STR; like furnishing my STR. Can I claim these expenses as deductions for my STR?

Are there any companies that can help set up LLC and does accounting for STR?

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    • Andrew SteffensBusiness Member
      Tampa, FL · Member since 2022 · 4k+ posts · 3k+ votes
      2y

      Hi Melanie

      Some of these questions depend on some other variables, but I will do my best to answer in generalities.

      1. Check with a CPA but you should be able to get most if not all of the tax benefits from keeping it in your personal name.

      2. You can create a management company (LLC) to manage the property. Not sure if that is beneficial for your or not, again check with a CPA.

      3. You will have to check with your lender.  A lot of times this will trigger acceleration clause, so depending on your loan it may or may not be possible.

      4. Probably not.

      5. Check with CPA.

      6. Check with CPA but furniture has its own depreciation schedule (7 years I believe).

      Ultimately I would check with your CPA to see if it is even worthwhile, and your lender to see if it is even possible. Most people use LLC for liability and asset protection, not necessarily tax benefit. You can mitigate the liability with a $2M GL policy (check with business insurance agent).

      Good luck!

      [email protected]813-563-0877
      Vacation Rentals of Florida53 Reviews
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    • Basit SiddiqiBusiness Member
      Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
      2y

      When you turn a personal residence into a rental, you want to make sure you calculate your basis properly.

      Your basis will be purchase price + improvements made to the house since time of purchase(Assuming the FMV at time of conversion is atleast this amount).

      Best of luck!

      [email protected]917-280-8544
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