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+--- Thread: How many hosts actually use an LLC? (/showthread.php?tid=58)
How many hosts actually use an LLC? - WillyWilkes - 02-25-2024
Has anyone here benefited from forming an LLC to operate a STR even though the property is owned under your name?. What benefits are there - if someone were to get injured you could still have liability correct? We have only one STR property so I’m not sure if there will be any tax benefits either - most of my friends in the rental / STR business do not use LLC's.
RE: How many hosts actually use an LLC? - xiaoxiao - 02-25-2024
The property needs to be owned by the LLC for you receive liability protection, otherwise both you and the LLC are jointly liable. This means you have to transfer the mortgage (if there is one) and deed over.
The goal of an LLC is to limit liability to the value of property. It's a strategy building owners use when they have many properties and want to limit the impact of large damages awards on the rest of their portfolio. However, if you have only one unit and you are properly insured with STR insurance this all may not be necessary and a waste of time/money. (not a lawyer)
RE: How many hosts actually use an LLC? - Smilez - 02-25-2024
When done correctly a LLC can and will limit your personal liability. It's the same as using a professional property management company instead of renting it yourself on Airbnb. You'll need a strong contract between the LLC and yourself and you need to follow all the LLC rules and regulations in your state. Even if you have an LLC and you break the rules (think operating an unlicensed STR) that doesn't absolve you personally of fines. A decent lawyer with experience in this can give you better advice.
RE: How many hosts actually use an LLC? - alankane - 02-25-2024
All of my STR’s are owned by individual LLC’s who are in turn owned by a parent LLC.
RE: How many hosts actually use an LLC? - Ursa83 - 02-25-2024
I don't use a LLC because my accountant advised me it's unnecessary and doesn't actually offer extra protection either in my case where I'm a small operator. I was still able to write off a bunch of expenses and am still getting a refund this year from my operations and expenses.
RE: How many hosts actually use an LLC? - javier1990 - 02-25-2024
My tax adviser who used to be a partner at PwC said it wasn’t useful from a tax perspective. Even if I had an LLC my income is considered passive so I cannot write off more than I make. From a legal perspective, possibly but I already have a good insurance policy for short term rentals.
RE: How many hosts actually use an LLC? - Annabell1990 - 02-26-2024
It also depends on the state you are in. Some states cost $100, others can be more than $500.
RE: How many hosts actually use an LLC? - orbitmic - 02-26-2024
We set up an LLC for our rental. Makes sense from a liability stand point, but you have to make sure the rental income and expenses go through a separate business account, not your personal accounts. You should be able to set it up without a lawyer at minimal cost, although some states cost way more than others. Here in Florida its around $100 but in Massachusetts it's $500.
RE: How many hosts actually use an LLC? - the810 - 02-26-2024
Getting an appropriate insurance policy would insulate you from any liability issues and it's easier than setting up and maintaining a LLC. Same end result.