Entities, LLCs, and Trusts.

Putting rental property into an LLC (Limited Liability Company) or a trust can offer various advantages and disadvantages. Here's a breakdown:

Please consult your Attorney and or CPA for advice in matters like these.

Pros of Putting Rental Property into an LLC:

Limited Liability: One of the primary reasons for using an LLC is to protect your personal assets. If something goes wrong with the property and you're sued, your personal assets typically won't be at risk, as they're separated from the LLC's assets.
Tax Flexibility: LLCs offer pass-through taxation, meaning profits and losses pass through to the owners' personal tax returns. This structure can offer flexibility in tax planning and potentially reduce overall tax liabilities.
Professionalism: Operating rental properties through an LLC can convey a sense of professionalism and legitimacy, which may be attractive to tenants and business partners.
Estate Planning: Transferring rental property to an LLC can be part of a comprehensive estate planning strategy, providing a structure for managing and distributing assets over time.

Costs: Forming and maintaining an LLC involves fees for registration, ongoing compliance requirements, and potential legal fees. These costs can vary depending on jurisdiction and specific needs.
Complexity: Operating through an LLC requires adherence to legal formalities, such as maintaining separate financial records, holding meetings, and complying with state regulations. Failure to do so could jeopardize the limited liability protection.
Financing Challenges: Securing financing for property held in an LLC may be more complex and potentially result in higher interest rates or stricter lending criteria compared to personal ownership.
If your property has a mortgage and you change the name on the deed without consent from your lender, it can trigger the “Due on Sale Clause.”

Privacy: Trust ownership offers a degree of privacy since trust documents are generally not public record, unlike LLC ownership, which may require public disclosure.
Avoidance of Probate: Placing property in a trust can help avoid the probate process, ensuring smoother and quicker transfer of assets to beneficiaries upon the property owner's death.
Asset Protection: Certain types of trusts, such as irrevocable trusts, can provide asset protection benefits similar to those of an LLC, shielding the property from creditors or legal judgments.