As others mentioned, there's really no benefit to doing business as a sole proprietor, so it probably doesn't hurt to do the LLC (other than the transaction costs associated with owning and operating one), but I generally believe that the protections afforded by these entities are way overblown, at least in the RE business, where individuals (myself included) are actively involved in the management of our rehabs/rentals.

Schedule E is used by an individual or a sole proprietor to itemize income and expenses from rental real estate.Form 8825 is used by a partnership or s-corporation to itemize income and expenses from rental real estate.So, the difference is the entity that is filing the tax return...

Thanks Jason,Last question, if my property is owned by an LLC that I am the sole proprietor on, but the insurance policy is under my personal name, then would that cause any issues?

Noah,Since you are currently operating as a sole-proprietor that is how your plan should be established. 

A sole proprietor can establish a 401K, hence there is no need for an LLC as far as the IRS is concerned.

If the LLC is a single entity LLC that chooses to be taxed as a sole proprietor then it does not file it's own tax return. 

@Lakshay Groveras a real estate agent you are in business for yourself (either incorporated or sole proprietor) so education costs can be treated as expenses; MLS access is not free you will need to be sponsored by a broker and you will have to pay annual fees to join your local realtor association, local MLS, etc.

Actually our goal is two-fold:1. to get cash to pay upcoming property taxes (OK, poor planning).2. to fund a new entity to rehab propertiesMy husband, a sole proprietor, has owned a few duplexes for years.

I am a sole proprietor owning houses.

This was considered a dis-regarded entity so the IRS considered me a sole-proprietor for taxation.