As most property lawyers will tell you, it is advisable to form an entity, more specifically an LLC, if you own rental property. Forming an LLC provides many benefits to rental property owners. Owning a rental property as an entity provides the benefits of asset protection, tax deductions, peace of mind and so much more. If you own a rental property and haven’t formed an entity yet, it’s time you consider all the benefits of this strategic business move.
The Benefits of Forming an Entity if You Own a Rental Property
LLCs are special kinds of legal entities that offer a more professional business structure and a safeguard for your personal assets in the event of a lawsuit, which are recognized by state governments. Every rental property owner has his or her own unique situation to consider, and may benefit from this legal structure in different ways. There are numerous potential advantages of forming this type of entity if you own rental property, such as the following:
- Flexible Tax Structure Choices
- Inexpensive Business Operation
- Personal Asset Protection
- Single Tax Layer
When you form an LLC with a corporate lawyer like Janathan L. Allen, APC, you and your business associates are able to choose how you prefer to be taxed, although there are certain restrictions for resident aliens here. One of the biggest advantages of this legal entity is how inexpensive and easy it is to operate, with few differences between how this business is structured and how it would be structured with no entity. And in addition to it being beneficial for business purposes, it is also beneficial for estate planning purposes.
The Background of the LLC (Limited Liability Company)
The LLC, which is short for limited liability company, is a fairly new type of entity that emerged from lawyers on the West Coast of the United States nearly two decades ago. Corporations, on the other hand, have been around for two centuries. Corporations were originally created as a way to protect business owners if they are sued. LLCs have a similar purpose – protecting members of the business entity from lawsuits. Even when lawsuits are filed against the owners, partners or members of an LLC, their personal property won’t be affected by the court decision. Since landlords are particularly susceptible to lawsuits, this type of entity is especially advantageous for rental property owners who want to protect themselves and remove a layer of risk.
For more information on the benefits of forming an entity if you own rental property, please contact us at 866-631-3470 to schedule a complimentary initial consultation with one of our legal professionals.