Rental property , Tax benefits & more

[Waldy Corniel]

Protecting Your Assets

If you are sued because someone is injured on your rental property, including a guest of the tenant, then your personal assets are not necessarily protected as an individual landlord. Regardless of how small or insignificant the lawsuit may seem, it can be a costly process to defend your assets. If you put your rental properties in an LLC, you will still have to pay for the cost of for an attorney should you be involved in a lawsuit; however, because the LLC is acting as the landlord, your personal assets are protected. The party that is suing may only go after the assets held in the LLC. Thus, if you have several properties, you may want to have a separate LLC for each property for added asset protection. Keeping each property in separate companies will further limit the assets that are vulnerable in a given lawsuit involving one of your properties.

You will also have liability protection that applies to situations involving creditors that are seeking to resolve debts. If you keep your rental property and your personal affairs completely separate from each other, your company assets can be protected from creditors in issues involving your personal debt and vice versa.