I have recently purchased my private home in San Antonio, TX. There is a very spacious in-law suite in the rear of the property. I am confident that through airbnb I could bring in between $1000 to 1500 a month depending on how aggressively I work at it.
My question is: what is the best way to set up the property within my existing LLC structures. I have other rental properties within their own LLC's and these LLC's are under an umbrella LLC. I am trying to determine if I need a separate LLC to lease the in-law suite from myself to then rent out through aribnb.
Is it even possible to lease a detached structure like an in-law suite to an LLC? Would this protect my private home should a law suit occur within the in law suite?
I am trying to protect my private home as well as separate rental income from my personal income to benefit from business tax deductions.
Any advise and insight would be greatly appreciated! Thanks!
Check with your local building department. To my knowledge I am not aware of codes that will legally allow renting a in-law suite. You will also likely not be able to get insurance or be in violation of your insurance with a illegal rental. In-law suites will not meet building codes due to safety codes for rental purposes. Check first with your local building department.
High liability risk.
@Grant Garbo thanks for the post. San Antonio has a lot of these types of properties and Air BNB'ing them is a very popular option. Lots of people do it. You can certainly create an LLC that your tenant would pay monies to but it's the OWNERSHIP of the property that would create the greatest liability threat to you. I have seen people put their own property in an LLC, then rent their property from that LLC, and that would help some but then you would not receive your "Homestead" tax exemption here in Texas. Another suggestion is just to have good insurance. Talk to your tax professional about more strategies but I hope this helps in some way. Thanks!
If your suite is permitted, I don't see a legal reason why any code would prevent you from renting it out.
We Airbnb and have mixed thoughts on their provided insurance. Liability protection is likely mixed since the ultimate owner faces the same recourse. If someone is killed in your airbnb, you're getting personally sued no matter the LLC or sublease agreement. That said, it can prevent lesser claims from getting through.
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