All Forum Posts by: Christopher Smith

Hi there! Stats say that if you are an investor for more than 10+ years, you have a 90% chance of being sued at some point. For long term investors, its not so mcuh of if you will be sued, but when. While insurance is a good first line of defense, it is not conclusive. Insurance companies are a business and inside of that looking to mitigate costs. In doing so, they will often find reasons to not pay out on a claim. If thats the case for you, you want a true line of defense in a lawsuit - thats where an LLC comes in. An LLC separates you from your business so that if your are sued, your personal assets arent at risk. Using an LLC not only provides liability protection but can open up opportunities for you for working with 3rd parties such as lenders or partners who require an LLC. If your LLC is set up correctly, the operations and financial pieces of it can be minimal and easy to manage.

Provide a reliable full citation that proves your referenced "stat". I've been a landlord for 25 years+ and have known many others personally (probably 20 or 30 more), 0% of them have been sued as I have specifically asked them. Perhaps I just hangout with a really really really responsible or lucky group of guys or maybe that "stat" is just another Mark Twain special.

1 Vote

Quote from @Vik Narin:

Hi, looking for some advice on being a NYC resident and investing in Ohio. Should I also consult a tax specialist in Ohio or just NYC? Also, any recommendations for tax specialists in NYC who are well versed in RE investments? I find that many of the ones I have spoken to aren't that well versed. Thanks so much.

I'm a CA resident with OH properties. OH has a business deduction available bto non residents so never actually pay tax just file an nonresident accordingly. No ultimate effect on CA return. Of course these are my facts, your facts maybe different.

0 Votes

New York City, New York

Quote from @Joe Martella:

A single member LLC is a disregarded entity. As for the taxes, there is a thread that was created by a CPA. Maybe you can get your tax answers there.

Ask me (a CPA) anything about taxes relating to real estate (biggerpockets.com)

If they are disregarded for tax purposes then by definition there are no additional tax benefits

0 Votes

Quote from @Tyler Peitzmeier:

@David Shuman

Hey David,

This seems to be a controversial topic as some people believe you don't need one, and others believe you do. I am in the belief that absolutely you should set up an LLC. From a tax perspective, legal protection and ease of business, I prefer it. Also, if you are looking to scale and purchase many properties and units, you're going to have to set up an LLC so you might as well just set it up right from the beginning.

Hope that helps!

Tyler

Specifically, what is the tax advantage/s of a Single member LLC? They are by definition disregarded for tax purposes - right? I've still to meet anyone in 25 years that was able to demonstrate to me that they actually avoided liability not otherwise covered by adequate liability insurance. Plus where I own properties and reside you pay through the nose to the state for every LLC owner those formed within the state and those out.

4 Votes

Quote from @Ben Nitka:

Hello!

I closed on my first rental property in the last few days of 2021 - it's a duplex in Ohio, and I live in California. So I've been told my taxes will be a little more complex this year. I've filed with Turbo Tax in the past and had a good experience, even with some freelance work in addition to my W-2, but I understand the out of state property will add some hurdles to the process.

Would love to hear from other real estate investors experiences with Turbo Tax when owning a property. I'm leaning toward continuing to use Turbo Tax, against the council of some of my friends who have hired someone to prepare their taxes for them.

I'm in CA and own rentals in Ohio and use TurboTax. Never had a problem although occasionally input screens can be frustrating.

I never owe tax to Ohio because of the business deduction, so it really ends up just being an information filing.

0 Votes

At 10 to 15 K for an SFR really hard to imagine how a mere timing difference could be worth it (even for a pricey CA property like most of mine). Time might be better off securing well thought economics on your deals. Don't get me wrong, I only pay current tax on about 5% of my total RE earnings (7 figure), so I'm all for exploiting sensible tax benefits. However in my opinion some of these products are vastly oversold and their presentation tax benefits vastly overstated (some might even say fraudulently misrepresented).

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Any other RE activities? If so what is their character.

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What was your intent when you bought the rental? Flip it?

1 Vote

Sounds like costs that might need to be capitalized to the land / lot.

1 Vote

There are firms that can act as an Intermediary (middle man) to assist two parties (the principals) to achieve certain tax objectives that can't be achieved in a transaction directly executed between the two principals.

They at one time were the domain of relatively large principals, but I have heard more recently of such activities being performed between smaller interests even as small individuals.

0 Votes

All Forum Posts by: Christopher Smith

Christopher Smith has started 21 posts and replied 1024 times.

Post: LLC yes or no for rental properties?

Post: Question regarding out of state investing and tax filing

Post: LLC yes or no for rental properties?

Post: LLC yes or no for rental properties?

Post: Turbo Tax with a rental property?

Post: Cost segregation for the purpose of expediting depreciation (SFR)

Post: What are the rules of the 1031exchange?

Post: What are the rules of the 1031exchange?

Post: Expense land costs on taxes

Post: Buy rental from parents as primary residence