I have 1 rental property, a dba. is it better to go llc? will i gain tax benefits? will i lose the write off
Answers:
the other answer is incorrect. It is not worth it to set up an LLC. the expense is not worth it, there are no real tax benefits and your liability protection is not any better if you are the sole owner of the llc.
The short answer is that your tax situation will not really change. The depreciation will apply regardless of how you do business and the same is true for deduction of expenses. You do have several other issues though.
If you set up an LLC then you can transfer the property to the LLC at basis in exchange for membership interests in the LLC. If it is a single member LLC then the default IRS treatment is that it is a disregarded entity for tax purposes and it will not effect your tax situation. Since rental income is not subject to self-employment this is probably a good option. You can also choose to have the LLC treated as a corporation for tax purposes through the 'check the box' regulations but based on your facts I do not think this has any benefit for you.
The DBA has no advantage at all. A DBA is not an entity, it is just you using a different name. It may help with marketing but has no tax or legal advantages.
The thing to watch here is the ancillary issues. If you transfer your property to an LLC you may cause acceleration of any mortgage and need to refinance. You could also uncap the property tax and see an increase there. Be careful that whatever you do you have proper insurance for both you and the entity as any change will effect the policy. Also, if you make a transfer be sure to work with a good attorney. If a Quit Claim Deed is used you may invalidate any title insurance so you will want to either purchase coverage or use a Covenant Deed or Warranty Deed and be very careful with the process.
I usually suggest the use of an LLC for rental property ownership as they are fairly easy to establish and maintain and provide some liability protection. If you properly establish, maintain and operate the LLC then you should protect yourself from any personal liability if a claim should be filed on the property. This is very important and probably worth your efforts to set up the transaction.
Make sure you get a competent attorney who will work with your CPA, Insurance Professional, and lender to see that these issues are all properly addressed.
It will take a little work but the process is quite manageable and will be a good way to help protect yourself.
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