LLC for a househack?

[Chanel Bostic]

Hi everyone! I recently purchased my first property and plan to house hack it. It is a Duplex located near Johns Hopkins University in Baltimore, MD. I am unfamiliar with how the tax process works for rental units, and I would like some suggestions on whether or not I should start an LLC to receive rents from my tenants. When tax season comes, I want to ensure I have taken the right steps to receive the most deductions and tax benefits for my property.

Also, I will most likely use TurboTenant to manage my property. Is that a good choice?

[Seth Hochberg]

I'm not a CPA, but I would not bother with the LLC.

I'm a new investor, so take this with a grain of salt, but I believe an LLC does not provide any real tax benefit. There are some complicated scenarios where maybe it helps, but if you just own this one property, I don't believe your tax bill would differ much (or at all) if your property is in an LLC. Anything you can deduct as a property owner, you can deduct regardless if the property is in your name or in an LLC.

The LLC serves to primarily protect your assets if you get sued. If you have a million dollars in assets, and then someone wants to sue you for this one property, they can go after your million dollars in assets if the property is in your name. But if the property is in an LLC and you've operated it correctly (look up how to avoid "piercing the veil"), then the damage would be isolated to your equity in the LLC. Umbrella insurance makes a lot of sense in your case, but peruse the plenty of bigger pockets forum debates about umbrella insurance vs LLC's. But you were asking about tax benefits, so I might be getting off topic here anyway...

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