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Dimitry K., Esq.
Dimitry K., Esq., Attorney
Category: Business Law
Satisfied Customers: 41221
Experience:  Run my own successful business/contract law practice.
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Transfer rental prop (single fam home worth 300k) to LLC?

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I have a rental property (single family residential worth 300k) and need to know best way to manage liability risk. Should i transfer property to a dedicated LLC ? Is an S-Corp a better option from a tax prep perspective ?


 


Property is my only rental and is also located in Utah, where i reside. 


 


I own my current home, with ~30% equity. I usually do my own taxes in turbotax but with rental and an LLC, that may change this year.

Thank you for your question.

If I may ask, is the property currently under mortgage or do you own it free and clear?
Customer: replied 4 years ago.

Can you provide an ETA on your answer ? Not sure how to log back in so please also send response [email protected] Thx.

Jack,

I have not attempted to answer your question yet as I am waiting on information from you. I need to know if the property is paid off in full, or if it is still under mortgage, since that will affect my answer to you. Thank you!
Customer: replied 4 years ago.

Rental is paid in full. Thought i sent this twice. Perhaps 3 is a charm.

Jack,

I got it this time. Working on your answer now, just wanted to inform you that the information was received.

Thank you for your patience.

I am sorry that this was a bit longer than expected, I really did not see your past posts.

The difference pertaining to to S-Corp and LLCs is based on whether or not you are seeking to grow the business entity later on. An S-Corp cannot own other businesses or be owned in turn, so if you are at some point considering obtaining more properties, placing them in other entities, and setting up a holding company, the S-Corp is not a good option. An S-Corp, like an LLC, has pass-through taxation, so you can pay taxes directly--there is no double-taxation involved. Generally an S-Corp has lower taxes than an LLC until about $200,000, where the LLC ends up having a more favorable tax basis. This is based on current regulations, however; the laws may change and so may the tax benefits. If the whole result is paying less taxes then the S-Corp is better option, but in terms of flexibility the LLC is the better solution.

Good luck.

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