How to create LLC/Scorp structure for Rental properties

[Gaurav Vedi]

Hello all,

I have multiple rental properties but haven't created any LLC structure. Now that I have read multiple posts and received recommendations from others and read BiggerPockets threads, I am inclined to create Entity structure to avoid any property liabilities and get tax advantages using income shifting strategies for my 1099 revenue from small IT LLC

This is what I am thinking and need some inputs from others on this channel. Please feel free to provide inputs.

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Parent Holding LLC (X)-----------------------> Revocable Trust

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Operating LLC (Y) LLC1 (A) LLC2(B) LLC3 (C)

1) Each rental property will get one Wyoming LLC (single member LLC) e.g. LLC1, LLC2, LLC3. This comes with advantage of anonymity of owner and address.

2) Parent Holding LLC (X) will be a multi-member Wyoming LLC responsible for buying or selling LLCs (A, B or C etc) and is taxed as SCorp for tax advantage. All rental Property LLCs (A, B,C) and Operating LLC reports under X. This also comes with advantage of anonymity of owner and address.

3) Operating LLC (Y) will be a single member Wyoming LLC and works as a Property Management responsible for day to day operations such as collecting rents, making mortgage/insurance/HOA payments etc on each LLCs (A,B,C) behalf. Also responsible for other expenses such as lawn maintenance, repairs, replacement of appliances etc on behalf of rental LLCs (A, B,C).

4) Y will charge monthly operating fee of 10% from each LLCs (A, B and C).

5) LLCs (A, B, C) will NOT have separate bank accounts. Only X and Y will have bank accounts. Y will collect rents and pay for all expenses on behalf of all rental LLCs.

6) Any leftover gains from Y will flow into X which can be distributed to its members at the end of the year. Also any losses from Y will flow into Parent Holding X for tax purposes and such losses will be adjusted towards active income.

7) Use a revocable trust to replace us in the ownership chain to avoid probate issues and easy inheritance to our kids.

Questions:

1. 1) Is this a good structure OR should I keep Operations LLC (Y) separate from Parent Holding LLC (X) and not under it to avoid any legal complications ?
   
2. 2) Also if keep Y separate from X, then should Y be a multi-member LLC and taxed as SCorp ?
3. 3) If I were to create a rental agreement essentially leasing my Home office space to any or all of these LLCs, can each of these LLC's have a separate Rental agreement with same residence ? Any Tax implications or any tax advantage ?
4. 4) What if I do the same for renting car to my own LLCs via a fomal lease agreement ? Any tax advantages ?

Thanks in Advance. Ready to get inputs from experts here !!

Regards