How are you going to deduct mortgage interest, depreciation, property taxes, insurance, etc on the cottage tied to your primary home - without getting flagged for an IRS audit?

The IRS uses material participation tests to determine if you are actively involved in an activity.

Always happy to hop on a call and have a chat to go more in depth if you'd like.Cheers!

As a single-member LLC, the IRS considers it a disregarded entity, meaning the income, expenses, and other tax-related items will still be reported on your personal tax return via Schedule E.

There may also be costs associated with setting up the accounting for the shells, and preparing inital shell formation meeting minutes, etc...You will also need separate bank accounts, and a war chest of money to defend them if/when needed.Ask your asset protection attorney vs salesperson for a quote on the cost to defend, and how much it will cost to move title to the shells.Find out if moving the title creates a taxable event for you with the IRS re.

The IRS is clear that only time You directly spend. 

Update your operating agreement, notify your state, and file IRS Form 8832 if needed.

Also adding in here for anyone else viewing that we would need to consider the possibility of the IRS classifying this as a second home versus an investment property and disallowing any potential 1031 exchange due to allowing a family member to use the home rent-free.There are safe harbors to qualify for a 1031 exchange.

To meet the IRS requirements for STR the number of personal use days is limited.  

Depreciation Recapture:When you sell, the IRS wants some of that depreciation back.