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