Keep in mind whether you are the investor performing work without permits or you acquired a property where the improvements were not properly permitted, you are opening the door to greater liability and less avenues to hold those responsible for construction defects accountable.

Your primary insurance policy with $300,000 in liability coverage should be sufficient in 99.999% of all lawsuits.5.

Quote from @Mike Hern: Quote from @Nicholas Davaul: A few reaons:  Anonymity,  Asset Protection, Baseless lawsuits that have happened to my friend with his real estate,  seperate business/personal assests/liabilities.   

For liability etc, I'd like to create an LLC that will own the house.Do I need to first subdivide my property in order for the LLC to assume ownership of it?

I do believe there is merit in following simple best practices that have asset protection as a side benefit:  1) Taking out large mortgages on properties to minimize equity; 2) Having adequate liability insurance; 3) Contributing assets to retirement plans and other protected vehicles; 4) Dividing ownership of family assets between yourself, your spouse, and your children; and, especially, 5) Running an honest business and treating people fairly.  

But hey, we've incorporated the only protection against liability right?

LLC creation for rental properties is purely a liability protection strategy. 

Having reviewed what's previously been discussed on this forum regarding whether people list what their actual cleaning cost is vs. a reduced (or in some cases inflated) price, can anyone share if there is a tax liability with this I'm unaware of?

There is no past gift tax liability for Persons B or C. 2.

Do you know what your tax liability would be if you sold without a 1031?