LLC for one property -yay or nay?

[Elizabeth Conklin]

I am hopeful that this question is not too basic. :) I have one rental property and wanting an LLC to manage expenses (avoid co mingling) and set up a more professional business structure for future purposes. Questions-

-Is this wise? My CPA has advised that there is no tax advantage (I won't be transferring the property to the LLC) and that the income I run through the LLC related to the property may then be subject to additional taxation. Is this correct?

-What is the most cost effective way to establish an LLC?

-Should the LLC be established in the State where I own the property (and future properties)?

THANK YOU!!

Elizabeth

[Bill B.]

No, you definitely don’t need one, and I’d say don’t want one. There is no tax advantage, you’re adding costs and complexity today and in the future if you ever want to refinance. It’s disregarded for tax purposes so it won’t help your personal finances. Or it’s not disregarded, and you will be taxed twice as your cpa said. 

If your net worth is over $1 million, buy an umbrella policy, you are 10 more likely to be sued personally than your property is. If your net worth is between $500k and $1mill you can either raise your limits or buy the umbrella, which ever is cheaper and lets you sleep better.