Form LLC so I can write off upfront costs?

[Kathy Moser]

Hi All,

I'm going to need to do a bunch of legal and inspection work prior to buying a multi home project.  It could run up to $10,000.  

I was wondering if it makes sense to form an LLC now so that I can pay all these costs through it and write them off against the income? Its an off market deal, likely doing seller financing. I need to do some title research and have a lawyer determine if the HOA's legal status is sound.

I want to do all this due diligence ahead of time because I'd rather spend that money than do the deal and find out the HOA is solid. The tax benefits of the HOA would more than pay for the legal fees in the first year.

Thanks!

[Simon W.]

That would be ideal to form LLC.

It is either expense those as a loss in the income statement or put them into a closing cost line item as an asset to amortize the expenses. Depends what the CPA think is best.