To LLC or not to LLC, that is the question
05-11-2018
08:54 PM

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05-11-2018
08:54 PM
To LLC or not to LLC, that is the question
Our property is pretty much strictly used to rent out to people for making some extra dough - a side business really.
After reading here as well as other places about the horrors that can happen, we are concerned enough to start investigating an LLC to put our property in.
It's extra overhead, a pain to deal with and frankly, I'm not sure what all else.
But it does seem to shield us from that one person coming in and taking everything we own because of a slip and fall and an agressive lawyer.
What do you guys do and why?
And what are the implications re: AirBnB if we do go the LLC route?
15 Replies 15
11-03-2019
03:16 AM

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11-03-2019
03:16 AM
We are wondering the same thing, should we form an LLC to protect us from personal liability if something were to happen? Does the AirBnB one million liability insurance cover us?
11-03-2019
03:34 AM

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11-03-2019
03:34 AM
@Amy-and-Brian0 @Randy-and-Loretta0
An S corp would be a better route (less reporting and cheaper). However essentially same thing with LLC. This makes no difference to ABB. They will report everything in your name anyway but that will not affect your level of legal protection. However, do make sure that utilities and all contracts are in the company’s name. Putting your property into a land trust and then creating an S corp to manage the property would afford you even more protection.
11-03-2019
03:34 AM
25-07-2019
04:10 PM

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25-07-2019
04:10 PM
@Inna22 hi I'm looking to do a LLC or an S Corp. How does it help with the deduction of losses? Did you have an issue with thr mortgage company when you move the property yo an LLC or S corp?
11-11-2020
09:29 PM

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11-11-2020
09:29 PM
There is no such thing as "creating an S corp." It is an IRS designation of a business entity that determines its treatment for tax purposes. Thus, you can CREATE an LLC and then get an S-corp designation. Lots of reasons to do this, and lots of reasons not to do this. You can also create a corporation and have it designated as an S-corp. The business entity is created as a matter of STATE law. The designation for tax purposes is governed by federal law, i.e., the IRS Code. When making these kinds of decision it is best to consult an attorney and a CPA.
25-07-2019
06:48 PM

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25-07-2019
06:48 PM
@Chamila2 the property itself is in a land trust, not in the corp. Your legal structure should not affect your ability to deduct losses (or do you mean expenses?)- hopefully you will be making money! Since laws and taxes vary by state, you should consult your attorney and your accountant as my approach might not necessarily fit your situation
25-07-2019
06:48 PM
25-07-2019
07:40 PM

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25-07-2019
07:40 PM
@Inna22 I meant expenses. I've only had the air bnb for one year and was trying to see the best way to deduct all the expenses Ive had with setting the place up and also the manegement company expenses since I live in a different state. I was trying to set up an LLC but the mortgage company said that it's not allowed. So was looking at other options
25-07-2019
07:40 PM
25-07-2019
07:53 PM

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25-07-2019
07:53 PM
@Chamila2 I do not know how it works in NJ, but in Chicago it makes no sense to move a property once established a certain way., However, you should still be able to write off just the same
25-07-2019
07:53 PM
25-07-2019
07:58 PM

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25-07-2019
07:58 PM
Thanks Inna22
25-07-2019
07:58 PM
25-07-2019
10:48 PM

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25-07-2019
10:48 PM
Here it works like this: you registrer LLC, then this LLC rents the unit (apartment, room, etc) from you as an individual. The LLC becomes just an operator of the unit-applying for a tourist registration, pay taxes, applying for licenses, etc...Nobody cares about the fact that the owner of the company and the landlord are the same person.
All this stupid and complicated thing is about two reasons. First-taxes. Second- the tourist registration/license.
If you try to work as an individual and everything must be legal, taxes will be 60-70% of your income. There is a third reason, actually-the VAT. If you cant issue a VAT invoice, you will lose business travelers. They have a large market share and is not OK to lose them.
25-07-2019
10:48 PM
26-07-2019
12:47 AM

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26-07-2019
12:47 AM
We live in Maryland and purchased a 1 million dollar "umbrella policy" from our insurance company. It only costs us $168 a year for this coverage.
06-09-2019
05:28 PM

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06-09-2019
05:28 PM
What company did you purchase the umbrella policy with? We asked our insurance company and they flat out said they do not cover Airbnb properties.
06-09-2019
05:28 PM
07-09-2019
12:18 AM

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07-09-2019
12:18 AM
Our old insurance company State Farm would not cover us . so we had to change insurance compaines All State allows is for 32.00 a month but must have people book through Airbnb as it is an extra policy which includes liabilty.
07-09-2019
12:18 AM
06-06-2020
06:15 PM

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06-06-2020
06:15 PM
Can you tell me what company you switched to?
06-06-2020
06:15 PM
26-10-2020
03:01 PM

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