Real Estate LLC Worth it? What about for each property?

Question

• 1. It seems like taking advantage of depreciation and all of the tax benefits of real estate are lost if your income is >$150k, unless you are a "real estate professional", right?
• 2. I've read a lot about legal entities that you can form for legal protection and tax benefits. But I've also been told, its generally not worth it to form an LLC for each property, because 'piercing the corporate veil' is generally trivial if needed.

Account Closed · Answer

The tax benefits are awesome for any income bracket. You use LLCs to protect assets. If the property has little equity, there really isn't much value in the hassles of doing an LLC the "right" way. And, there is No value in doing an LLC the "wrong" way. (Consult an attorney for the gory details) Look into Umbrella insurance instead, until you have considerable equity.

Basit Siddiqi · Answer

Account ClosedIf you make above $150,000. You are correct that you can't offset the losses from real estate with your other income. However, I wouldn't go so far to say that there are no tax benefits.First and foremost, you may be cash-flow positive on your investments yet report no taxable income thanks to depreciation.You can be in the top bracket yet pay no taxes on that cash-flow.LLC's and asset protection is something to be discussed with an attorney. If you treat the LLC like a business, there is no reason that it shouldn't give you the protection you are looking for.

Christopher Smith · Answer

I obtain all real estate tax advantages and my income is well over >150k. My properties are all very profitable after depreciation so I lose no tax benefits regardless of the level of my income, plus I can fully exploit new 199A, expanded 179 / Bonus Depreciation, etc.. That's the advantage of selecting properties carefully (i.e., those that are highly profitable standing upon their own investment merits, not juiced by aggressive tax positions and other dubious gimmicks).

I don't use LLCs. I achieve more than adequate protection through the responsible acquisition of liability insurance property specific and umbrella, and I do it at a tiny fraction of the cost and hassle that an array of LLCs would cost me.

Real Estate LLC Worth it? What about for each property?

Most Popular Reply