Florida LLC for Rentals

[stephenson]

Hi All,

I think I am about ready to accept the advice from some that I need to set up an LLC for our three rental houses.

I've read through how to do this at: Instructions for Articles of Organization (FL LLC) - Division of Corporations - Florida Department of State .. looks like it costs $125 and comes with requirements for annual reporting.

I am sure some of you have LLCs set up in your states - I would appreciate your thoughts - I would especially appreciate feedback from those of you in Florida who have done this!

Thanks!!!

[kgtest]

Quote:

Originally Posted by stephenson Hi All, I think I am about ready to accept the advice from some that I need to set up an LLC for our three rental houses. I've read through how to do this at: Instructions for Articles of Organization (FL LLC) - Division of Corporations - Florida Department of State .. looks like it costs $125 and comes with requirements for annual reporting. I am sure some of you have LLCs set up in your states - I would appreciate your thoughts - I would especially appreciate feedback from those of you in Florida who have done this! Thanks!!!

In my state, there is a one time filing fee for the LLC with SecState. Then come tax time, at end of year I file Sales and Use tax. I do not have any employees.

Of course pay your taxes you owe as well.

[stephenson]

As a quick follow-up question ...

Single LLC or LLC for each property?

[Ronstar]

Quote:

Originally Posted by stephenson As a quick follow-up question ... Single LLC or LLC for each property?

We had an Illinois LLC that owned an office building. Sold it and 1031'd into 3 Florida condos. All under the same LLC. So I think its ok to have multiple condos in one LLC, but I'm not sure whether that is the best way to set it up initially.

[Senator]

Quote:

Originally Posted by stephenson As a quick follow-up question ... Single LLC or LLC for each property?

All my rentals have their own LLC. I have an S-Corp that manages the rentals. I have an LLC that distributes the profits and losses to the LLC, so the S-Corp only has to deal with one LLC.

A separate tax form for each, most very similar. No annual fees.

[socaldonnan]

Why don't you just purchase umbrella insurance coverage? You could pick up 3 to 4 million dollars fairly inexpensively. I'm assuming that if you go the route of LLC for each property it will indemnify each individual property should you have a claim? We have 2 million dollars in umbrella coverage because we have a rental and the yearly premium is $345.

[Senator]

Quote:

Originally Posted by socaldonnan Why don't you just purchase umbrella insurance coverage? You could pick up 3 to 4 million dollars fairly inexpensively. I'm assuming that if you go the route of LLC for each property it will indemnify each individual property should you have a claim? We have 2 million dollars in umbrella coverage because we have a rental and the yearly premium is $345.

My S-Corp has a business liability policy, and also a business umbrella. I also have a personal umbrella.

I think the tax benefits of an LLC or S-Corp also help. It differentiates the business from your personal assets. It makes getting all your assets more difficult, you can always cut one loose to save the rest.

[pb4uski]

What tax benefits?... it's just a pass-through to the owner isn't it?

[stephenson]

Perhaps my needs are less, but having both an S and several LLCs seems like overkill ... especially if we have an umbrella (mainly to get more attorneys involved in case of frivolous lawsuit) ...??

Any real difference in tax filing?

[Sunset]

I would think, beyond the annual filing requirements of each LLC, that each has to do a return, and you have to do one as well. ?

I had once looked at it, but already had the rental, and to move it to an LLC, would be a hassle, as would be a taxable event (in my case).

So I went with insurance.

If I was starting out, I'd do an LLC for each property, like Senator (understand I think he has a lot of properties). So that each is protected from the others.

[GrandmaHoo]

Quote:

Originally Posted by kgtest In my state, there is a one time filing fee for the LLC with SecState. Then come tax time, at end of year I file Sales and Use tax. I do not have any employees. Of course pay your taxes you owe as well.

Why did you do a LLC? I own a rental condo in FL with insurance policy that covers liability.

[Senator]

Quote:

Originally Posted by GrandmaHoo Why did you do a LLC? I own a rental condo in FL with insurance policy that covers liability.

I would never go without an umbrella policy, nor a business liability policy. I think the LLC protects a bit too. The veil can be pierced, but it costs more money to do so.

Quote:

Originally Posted by pb4uski What tax benefits?... it's just a pass-through to the owner isn't it?

I also think the LLC or S-Corp provides more business tax benefits and more flexibility on how income is reported. Cell phone, computers, office expenses ($1500), mileage or a car for LLC affairs, etc. You can pay family members, take dividends, or just take pass through income.

An S-Corp or LLC can rent your personal home for up to 14 days and you take the money tax free.

[stephenson]

OK, finally back from a wedding ...was distracting for awhile.

Florida LLC is $125 to set up, and it looks like an additional $138 a year filed with the annual report between Jan and May. I suspect several folks here have FL properties - does this sound right?

I can understand the set up fee, but another fee of that magnitude per year is pretty onerous.

[BreathFree]

Quote:

Originally Posted by stephenson OK, finally back from a wedding ...was distracting for awhile. Florida LLC is $125 to set up, and it looks like an additional $138 a year filed with the annual report between Jan and May. I suspect several folks here have FL properties - does this sound right? I can understand the set up fee, but another fee of that magnitude per year is pretty onerous.

I am in Florida. Yes, this is what I pay for the yearly for each LLC. I had my lawyer set up the LLC, so it was more than $125.00 for the setup.

I was told you have to have more than one person listed as a shareholder for the courts to recognize the LLC for limited liability purposes. Also, I was told I would have to transfer the properties to the LLC using a quit claims deed. I found if I transferred the properties to the LLC, I wasn't able to get a Liability policy in my name to cover me since they would no longer be in my name.

After discussion with lawyer and insurance agent, I decided to leave the properties in my name so I could get the liability policy but run the business as an LLC. This was over ten years ago so maybe it has changed.

The best advise probably is to visit your properties often and address any issues. I talk with my tenants every two weeks and fix any potential problems, every Jan I check and replace fire extinguishers and smoke detectors. Keep all records of repairs.

[meierlde]

Quote:

Originally Posted by BreathFree I am in Florida. Yes, this is what I pay for the yearly for each LLC. I had my lawyer set up the LLC, so it was more than $125.00 for the setup. I was told you have to have more than one person listed as a shareholder for the courts to recognize the LLC for limited liability purposes. Also, I was told I would have to transfer the properties to the LLC using a quit claims deed. I found if I transferred the properties to the LLC, I wasn't able to get a Liability policy in my name to cover me since they would no longer be in my name. After discussion with lawyer and insurance agent, I decided to leave the properties in my name so I could get the liability policy but run the business as an LLC. This was over ten years ago so maybe it has changed. The best advise probably is to visit your properties often and address any issues. I talk with my tenants every two weeks and fix any potential problems, every Jan I check and replace fire extinguishers and smoke detectors. Keep all records of repairs.

If the LLC really is legitimate then why not the same liability policy in the name of the LLC? This would protect the second shareholder also. (and buy legal defense from the insurance company).

[BreathFree]

Quote:

Originally Posted by meierlde If the LLC really is legitimate then why not the same liability policy in the name of the LLC? This would protect the second shareholder also. (and buy legal defense from the insurance company).

I set my LLC's up ten years ago, so my memory may be a bit fuzzy but I believe the cost was unacceptable for me personally. If I remember correctly, I would have had to purchase a separate liability policy for each LLC and then a liability policy for me personally to cover anything outside the rentals.

Also, by going with the personal LLC, I only had to carry 100,000 liability under my home owner insurance polices for each rental, where the liability policy for the LLC required me to carry $300,000 per property, and I was unable to do that on one property due to the age of the property and the insurers who would cover it. Even if I was able to do it, it would require a higher payment on each home owner insurance policy premium to cover the additional liability coverage of 300,000 per property.

I feel pretty good with the liability policy, and I have the option to increase the amount at any time if I feel the need.