LLCs, asset protection, and taxes for rental properties

[Andrew Pappas]

I've read a lot about the asset protection plan of buying a property in your personal name with conventional financing, then quit claim the property into their LLC. My property manager told me he's seen people do this, only to have the corporate veil easily pierced in a lawsuit because the mortgage is still under the individual's personal name. Furthermore, it's easy to see the sale record of a property or deed transfer on the county web site, so anyone can find the true owner of the property. With this in mind, is it worth the money to use LLCs for rental property holdings from an asset protection standpoint?

Also, is it worth filing a separate tax return for an LLC with rental property holdings, or is it fine to have it flow through your personal return? Are their any tax advantages or asset protection advantages (for example would a judge ask to see separate tax returns in a lawsuit against your LLC)?

It cost me an extra $700 to file separately for my LLC, so I'm just wondering if it's worth it.

Thank you!