Skip to content
×
Try PRO Free Today!
BiggerPockets Pro offers you a comprehensive suite of tools and resources
Market and Deal Finder Tools
Deal Analysis Calculators
Property Management Software
Exclusive discounts to Home Depot, RentRedi, and more
$0
7 days free
$828/yr or $69/mo when billed monthly.
$390/yr or $32.5/mo when billed annually.
7 days free. Cancel anytime.
Already a Pro Member? Sign in here

Join Over 3 Million Real Estate Investors

Create a free BiggerPockets account to comment, participate, and connect with over 3 million real estate investors.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
The community here is like my own little personal real estate army that I can depend upon to help me through ANY problems I come across.
Tax, SDIRAs & Cost Segregation
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated about 4 years ago on . Most recent reply

User Stats

11
Posts
8
Votes
Craig Moreau
8
Votes |
11
Posts

Create an LLC for our first house hack?

Craig Moreau
Posted

Hey BP,

My business partner and I are getting started purchasing our first duplex to live in. We have started other small online businesses as sort of a "side hustle" but never in the real estate space with real assets. As our portfolio grows, we want to make sure were getting the most out of our investment. I've done quite a bit of research and worked with some of my mentors in the real estate space on establishing an LLC for real estate holdings. We want to grow our own portfolio into a business and even further into a property management company (down the road).

Everyone gets into real estate by different means but one of the most popular is house hacking. We plan to purchase our first duplex and house hack until we can double up and buy another one the following year.

When is an appropriate time to establish an LLC for these real estate holdings? We will be generating income from our first property but also living in it, so I'm seeking advice from anyone with experience in creating these entities that may be able to provide some insight. Our plan was to establish it after we purchased our second property since the first one would be solely an income property.

Also, how would having two co-owners impact the taxation (ex. Mortgage interest deductions) if it wasn't a "single-member" LLC? Would this help us or hurt us as we got going trying to build our portfolio?

We want to begin taking advantage of the benefits of creating an LLC along with purchasing our first property, but I don't want to jump the gun if it did not make sense for the first property.

Any insight would be much appreciated!

-Craig

Most Popular Reply

User Stats

3,839
Posts
3,151
Votes
Ashish Acharya
#2 Tax, SDIRAs & Cost Segregation Contributor
  • CPA, CFP®, PFS
  • Florida
3,151
Votes |
3,839
Posts
Ashish Acharya
#2 Tax, SDIRAs & Cost Segregation Contributor
  • CPA, CFP®, PFS
  • Florida
Replied

@Craig Moreau ,

LLC for house Hack is almost unnecessary and does not make any sense.

LLC would create more of a headache than benefits until you have a few numbers of properties.

LLC offers no tax advantages in the Buy and holds investing.

If there is some unique reason that you need an LLC, then MMLLC is taxed as a partnership. It files its own return, 1065. you would deduct all the expense at the partnership return. It will flow your share of income/loss to you and you will report it on your personal return.

For the first few deals, LLC might not be fruitful, but your personal situation might require one. Talking to the attorney would give you closure.

business profile image
Investor Friendly CPA®
5.0 stars
215 Reviews

Loading replies...