How Landlords can Form LLCs & Reap Tax Benefits in 2018

Posted by Hannah Lapin on Jan 10, 2018 9:20:21 AM

How Landlords Can Form LLCs

The New GOP Tax Plan is in effect for 2018, and pass-through businesses, such as S-corporations, LLCs and partnerships, are set to benefit greatly. Now instead of being taxed 37% on income, LLCs will be taxed 29.6%, which is a huge incentive for real estate investors to buy properties under LLCs. So the question then becomes, how do you get started?

Setting up an LLC is a lot simpler than you might think, and there are ample, free resources available to help you. The first step is to check the qualifications of your state, as the requirements vary.

Nolo, a publisher in Berkeley, California specializing in legal publications, does an excellent job of highlighting the steps and state qualifications. Getting started is as simple as coming up with a name for your LLC. Typically, the name must be unique and indicate that the business is, in fact, a limited liability corporation (i.e. put LLC at the end of the name).

Then comes documentation. File Articles of Organization, which are the basic documents required to create an LLC, with your state’s LLC filing office. These include your LLC’s name, its address, and the names of all its owners, also called members. Often, you will appoint a “registered agent” to act as a person designated to receive legal papers. The other essential document for LLCs, though not required by law in most states, is an Operating Agreement. An operating agreement will help you establish the LLC’s operations and policies.  Finally, obtain all the licenses and permits required by your state.

Can you do it yourself with the assistance of some of these online resources?  Sure.  Should you do it yourself is another question.  Getting it set up correctly on the front-end so that the LLC fully meets your investment needs can save you time and money downstream.  To find a local attorney to help you with the process, visit Avvo.

For more help and hands-on guidance on establishing your LLC, read the full Nolo article.  For more tax help, visit our Tax Resources Page. To refinance your rental property through an LLC, contact us about financing.

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Related: Bonus Depreciation and Section 179 of the New Tax Code, Will Landlords Benefit from the 20% Pass-Through Deduction?

Topics: Taxes

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The information in this blog has been prepared solely for informational purposes. The contents are based upon or derived form information generally believed to be reliable although Visio accepts no liability with regard to the user's reliance on it. For legal advice, please contact your counsel.