Tax Benefits of Starting An LLC

[Carly Christiansen]

Hi there!

Scenario: My husband and I have been renting out or old primary residence in the Tacoma, WA area and plan to sell next spring if the market is as good as it currently is. Based on comparable sales, we should make between $80 and $110k. We are wanting to utilize a 1031 exchange to buy a duplex in an area (Tri-Cities, WA) that has much lower housing prices and a good rental market. Our annual income is too high to get tax benefits from passive investments. My questions:

1. Would forming an LLC allow us to deduct expenses with the rental?

2. What is the cost to transfer the mortgage/deed to the LLC?

3. Any other work arounds out there besides getting a real estate license, which we aren’t really sure we want to do?