Best REI holding structure and tax implications?

[Joe Canavan]

Hey everyone. Fairly new to the world of real estate investing (primary and one multi) with the goal of building a portfolio with several+ properties in the coming years. Would love to learn from you all about how you’ve structured your investments (trusts, LLCs, keep in name) and implications for each method. Additionally, how does it influence tax reporting, and does having properties in different states impact?

Look forward to learning - thanks for any and all thoughts/insights!

[Michael Plaks]

@Joe Canavan

All it takes is to search this forum for "LLC rentals" - and you will get dozens of threads just this year that beat your question to death.

The short version for landlords (as in long-term buy and hold) is: 

• it does not generally matter for taxes, except for the state taxes and fees imposed on LLCs
• trusts and LLCs are supposed to provide legal protection aka asset protection - an attorney's area, but everybody and their grandmother know better than lawyers
• there is an endless debate, even between attorneys, on the benefits (or lack thereof) of LLCs and trusts, on the type of LLCs and trusts, on the state where to form them etc. Think Ford v. Chevy debate.

My advice is to find ONE attorney who meets your criteria of a good attorney, preferably local, and then subscribe to whatever asset protection religion that particular attorney practices. Don't seek a second opinion, because it's guaranteed to be different. And the 3rd opinion, if you ask for it, will contradict both the 1st and the 2nd.