Real estate rookie taxes

[Ryan Galloway]

Hello all-

Sorry for the novice question. My brother and I own a home without a mortgage and want to start doing short term rentals. From a tax standpoint what is the best way for us to set up with an interest to scale relatively quickly. Do we need to put the house in a combined LLC? Thanks in advance! Eager to learn.

RG

[Bjorn Ahlblad]

@Ryan Galloway welcome to BP! Congrats on going into REI business. Having an LLC with a name, bank account, cheques, credit cards and you both as members makes things a lot more orderly and business like. I would recommend that. You can do it yourselves on legalzoom or have a lawyer draw it up. All the best!

[John Malone]

@Ryan Galloway speak to a tax advisor but a lot will depend how title/mortgage held. You’ll also want to ensure what you set up is scalable so if you do grow quickly, the structure is in place

[Clark Peterson]

Hi @Ryan Galloway, 

You’re on the right path here. Here are the steps to take. 
1. Form your LLC in the state the property resides in
2. Create an operating agreement between yourself and your sibling

3. Get an EIN for the entity from the IRS and set up a bank account tied to the EIN
4. Deed the property from your names to the LLC using either a quit claim deed or warranty deed
5. Record the deed at the county recorder

I know it sounds like a lot of work but it’s very doable and there are a lot of services to help me this all easier and mostly online. 

Feel free to reach out if I you have any questions! 

Clark 

[Jeff Nash]

@Clark Peterson provided you with a nice concise summary of good steps to take.  I would collaborate with an attorney just to make sure you do things correctly.