Creating a construction LLC for rentals

[Matthew Hollister]

Hello this may be a silly question... but I was wondering is it beneficial to have a construction LLC for rental properties.. I have 7 SFH and I do all the work myself I'm always working on a BRRRR project. I buy a lot of tools, trucks, etc.. Any tax benefit to this???

[David M.]

@Matthew Hollister

Unless you are investing/working with non-spousal partners, there generally is no tax benefit to having a LLC. For your rentals, you should be able to make the deductions. Meanwhile, paying yourself (your construction LLC) out of your rental accounts only converts passive income to active income (granted, your llc should have some deductions), a less tax advantageous category. If you are looking for is just to deduct tools and materials, then I wouldn't bother. If you wanted the construction LLC for branding/marketing or perhaps one day taking on work from the outside, then there would be some use. However, for just yourself, I personally don't see a reason for the limited liability protection, the primary benefit of a LLC.

Good luck.