@Connie Tang IF you were to set up an LLC, I'd advise setting it up as a Wyoming LLC. I think it Costs around $50 to incorporate there and maybe $100 tops for annual fees. Im unaware of any tax benefits of an LLC just used to hold a passive real estate investment. It likely flows down to your personal tax return anyway. Perhaps when you hear of other investors setting up LLCs for REI they are involved in active investing such as flips. In that case, there certainly are ways to write off expenses regardless of the entity formation. The primary reason for holding property in an LLC is asset protection. I let me use some examples: if you buy this one property to rent and hold it in an LLC, and someone gets hurt on the property then you may be sued and perhaps determined to be liable. Depending on the settlement amount, you could lose the house and all of your equity. So it depends on how much equity you have invested in the property and how much you're willing to risk losing (above and beyond your HO insurance). This is why people sometimes put one house per LLC, because only what is held by each LLC is exposed to a potential lawsuit. If you had 3-4 other properties held by that same LLC, then theoretically those properties are at risk as well. While something catastrophic could happen, it's unlikely and I think HO insurance is enough and maybe add an umbrella policy if you've got a lot of equity or a couple properties in the entity. Once you've got a portfolio of properties it may be beneficial to have a holding company. In summary, it's asset protection and anonymity you're after with an LLC holding passive investments, not tax benefits.
