Does a short term rental need to be set up in a LLC?

[Chad Ramsey]

I'm under contract to close on my first short term rental (vacation home..AirBnB)... I understand the LLC would be helpful if ever I sold the place so there is no need to re-permit. Any tax implications? Any other considerations?

[Eric P.]

Originally posted by @Chad Ramsey:

I'm under contract to close on my first short term rental (vacation home..AirBnB)... I understand the LLC would be helpful if ever I sold the place so there is no need to re-permit. Any tax implications? Any other considerations?

This question comes up a lot & I get the feeling that some folks don't really understand how an LLC works. The LLC isn't to protect your rental property (that's what insurance is for); the LLC is to isolate your property so if you get sued no one can touch your OTHER assets that aren't in the LLC.

If you have valuable other assets (bank accts, stocks, bonds, brokerage accts, 401k, other houses, etc), then it's worth considering an LLC for the rental property so if something happens & you're sued, the lawsuit is isolated to just the LLC & not your personal assets (if done properly). Also, I'm not a lawyer & there are certainly some nuances beyond this that a good lawyer can tell you - this is just a high-level overview