All Forum Posts by: Chris Carrigan

I was including the cost of paying someone to file the taxes vs doing my own if it wasn't in an LLC. So $450 in fee's, $500 for filing,

Having a hard time making the decision on putting a new STR into an LLC or just getting an Umbrella policy. In NC it costs about $450 a year in fees for the LLC (Annual Report and Franchise Fee). I currently pay a CPA $500 a year to file my business taxes on my Real Estate Firm, so I'm guessing about the same for the LLC which has to be a Multi-member because its my wife and I - so its a partnership tax return. I already paid $400 to set up the LLC, but haven't transferred the property yet. There is no loan (other than a HELOC from my personal property).

So I estimate the annual operating cost of the LLC to be around $1000. I will have a commercial policy from Proper on the property and could of course get additional umbrella protection for less than $1000 a year.

Thoughts?

Hi Roy,

I'm a Realtor based in the Triangle, I'm also in the process of starting my first STR (not in the Triangle). Would be glad to assist you in finding properties in the area.

Chris

We inherited a home that I am currently renovating with a HELOC I took out on our primary home. The property itself is a SFH on 44 acres. I want to get the HELOC off of the primary home as soon as I'm done renovating and get it onto the STR property. I know that loans on investment properties are harder to obtain, but will that be the case if it is a first position loan? There is currently no mortgage on the property. The loan will be under $75k, the home itself will be valued around $175k, and then there is the acreage and about a $30-$40k timber value. Anyone know of any lenders that would work with that before there is a rental history? Location is NC

Thanks

Quote from @Leslie Anne Morris:

I'm happy to give a recommendation for a super real estate focused CPA. He is heavily focused on STR

 Hi Leslie,

Can you send the contact info to me also?

Thanks

Chris

Quote from @Michael Baum:

Hey @Chris Carrigan, you seem to have a fairly complicated business structure. I am surprised to don't have a CPA advising you on this.

Frankly I would get a CPA involved. Once you have an S-Corp in the mix, things can get real murky quick.

I suppose the simplest way would be to create a new LLC with you and your wife as shareholders and put the STR in that entity.

The risk I see is that, even though it is shielded somewhat, everything is linked via you and your wife being sole shareholders. It is still possible, no matter how well protected you are, to pierce the veil.

We have been operating our STR just as a couple for the last 5 years with no issue. If you have the right insurance and enough coverage you should be fine in that regard.

Anyways, I am not a CPA or attorney so there ya go. I would seriously consider getting a CPA involved at this time. We have a much simpler situation and we use a CPA and it has been great. He has saved us more money than we have spent on it.

Another thing to think about is the billions of dollars going to the IRS for 87,000 new agents. I can guarantee that people like you and me and other investors will be targeted for audits. Having a CPA to dot the i's and cross the t's and represent you if (when) things get hairy will be a Godsend IMHO. Anyone who deducts a bunch for cost of business will be targeted.

 I do have a CPA for the S-corp, but all they do is complete the business taxes for me at the end of the year for $500, I'm still doing the day to day book keeping.

Quote from @Leslie Anne Morris:

If you are married filing jointly isn't the LLC a disregarded entity for tax purposes? I would make that assumption but I am not an accountant or CPA. You may want to consult with one.

It could be in community property state, but in NC if its a 1 person LLC it's a disregarded entity, but as soon as you add a second person (spouse or otherwise) it becomes a partnership.

Quote from @David M.:

@Chris Carrigan

If you already have a LLC elected to be taxed as a S-Corp, why can't you handle another LLC? Even if you do a multi-member LLC, yes its taxed as a partnership so you do a 1065 partnership return and then do your own returns.

It makes sense to have the STR separately. So, if you definitely want the limited liability protection of the LLC and willing to pay for the commercial loan, go with a LLC. You could always have just one of you be the member, but make it manager-managed and have both of you be the managers. Now its just part of your 1040 tax return. Regardless of how you operate the STR (so its active or passive income), you'll not want it held by a SCorp. Apparently, the "corp-like" aspects of the S-Corp get in the way --- its not advisable to hold real property in a Corporation.

Does that help?

Yes, I guess the only option is either go ahead and do the LLC together in which case its a partnership and we have to do the extra partnership operating agreement and tax forms or put it in one name and make the other spouse a manager or member, but then that would make them an employee which brings it's own issues.  I guess we'll do the partnership LLC, so that's more money to the attorney, CPA, and state.  I hate giving my money to other people ;o).  

Getting ready to start up a STR using a property inherited by my wife. We have an LLC which we operate as an S-Corp for our real estate business, but want to keep this venture separate from our brokerage business. So looking to set up a new LLC, but wondering which is the best election. We are in NC. If we both want to be owners, does that require we do a partnership? I was thinking qualified joint venture, but then read that doesn't apply to an LLC. I want the legal protection of the LLC, but trying to keep it as simple as possible so that I can do the taxes without having to have a CPA.