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What is the Best Business Entity for Owning Rental Property?

Attorney Thomas B. Burton discussing buying rental property and gives some ideas on one popular business entity for owning rental property in order to separate your business assets and liabilities from your personal assets.

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Transcript of Video: What is the Best Business Entity for Owning Rental Property?

Today's question...

Someone asked I'm buying a rental property

And I'm wondering what's the best way to hold and manage this property?

My answer would be considered a single number or multi-member LLC

if it's just you buying the property

You can form a single-member LLC

or limited liability

Company and buy the property within that company

now you want to make sure when you buy the property that the deed is titled

in the name of the LLC not in your individual name

the reason many people use an LLC for rental properties is to separate the

liability of their rental businessfrom their personal assets

For instance let's say something terrible happens and someone slips and falls at your rental property

and sues you. Well if you have it properly

structured in an LLC they are limited to recovering against the assets of that LLC and

Should not be able to come take your family home, or sue you personallyfor their losses

It's also a good idea to think about liability insurance for sure if you're entering into a rental business

But if you're buying your first rental property I'd suggest looking at an LLC and

talk to your lawyer about flow through taxation

Partnership taxation getting you all set up with your EIN

For your taxes and it can be a very useful entity for rental properties

Some people I know do a separate

LLC for each rental property others put a few in an LLC and then as they buy more they form a new LLC

Talk with your lawyer about the pros and cons and costs of each. Great question and thank you for asking!

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© 2018 Law Office of Thomas B. Burton. All Rights Reserved.

Transcript and captions provided for ease of access for the hearing impaired.

For questions about this topic, or to suggest a topic for a future blog post, please contact my office.

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