Starting an LLC as a tax shelter

[Janosch Spohner]

So what I understand from the things I have read so far is that an LLC is a separate entity that can protect you from lawsuits and allows you to take advantage of different tax write offs. Also, LLC's only pay taxes on their profits where as if I personally report my rental income for the year it will be added to my income and push me into a higher tax bracket causing me to pay even more in Taxes.

My mortgage is about $1,500 per month, and I collect $550 x 2 (renting two rooms), that's $1,100 in monthly income, my GF and I split the difference and then utilities are split between the 4 of us all (usually between $75-$100 per month). So typically I collect around $625 x 2 from my roommates and $300 from my gf for a rough total of $1,550 (and then I pay for all the utilities). $1,550 x 12 would be $18,600 that is added to my yearly individual income which would definitely suck to pay 25-30% taxes on. If I show my LLC collecting $1,550 in rent while paying a $1,500 mortgage, I would show a cash-flow of $50/month ($600/year) which would be wayyy less in taxes.

At least that is how I am picturing it would work, please correct me if I am wrong. I have also been told that as an individual, I can deduct the interest I pay on my Mortgage (which is a lot since I only put 3.5% down on the house) on my taxes, would I still be able to do this if it was in an LLC?

Also would the house have to be in the name of the LLC for me to do this or could I just leave it in my name?

If you have any tips for me, recommendations for where I should get the LLC, a good Real Estate CPA (near Acworth, GA) or reading materials (books, articles, stuff on bigger pockets, etc.) please share them below! And if anyone else is interested in doing something like this and you have questions please put them below too!

[David M.]

@Janosch Spohner

https://www.thebalance.com/limited-liability-companies-for-beginners-357531

You might want to educate yourself first.  Try the above site.  They have tons of short, informative articles.  At the bottom of every page / blog are more articles.  Instead of getting piecemeal advice from different people / directions on different aspects, try reading through several of their articles.  I'd like to think it will answer everything, but you will be certainly better educated and the BP community will continue to be here for you.

Good luck!