Multi-Unit First Time Buyer Live and Rent... Set Up LLC or Not?

[Olu Owasanoye]

Currently looking to purchase a multi family or duplex property to live in and rent other unit out. Is it best to set up a LLC? will it have tax benefits or not? just trying to figure out what's best practise

[Account Closed]

Hi Olu. An LLC is fairly simple in Illinois. Around $150 to set up and once a year you file an annual report which is a simple form, to the state of Illinois (will tack on another $75). As mentioned, you should think about the level of assets you hold and whether or not you want to be protected. I have seen those with one investment property close in their own name, for cheaper, and get an insurance policy that was more than ample to protect from loss (eg. $1 million policy). Others that hold multiple properties usually form LLCs. All depends on risk tolerance.

If you have an LLC, fees are here : https://www.cyberdriveillinois.com/news/2017/decem....

For taxes, it is possible to get a small deduction from the LLC's return via a pass through deduction but the tax law around this is complex and situation specific. No matter if you form an LLC or not, you get to deduct the same expenses no matter if you itemize or not (interest, mortgage insurance premiums, other costs).

Hope that helps,

Zach