Over the past few months several realtors have asked me: “Is it true that if I form a LLC (limited liability company) and run my real estate business through it I can pay less in taxes?” Before I answer that question I must clarify that I am NOT an accountant and this post should not be relied on as accounting advice. This post may, however, be used as “food for thought” and the basis for a discussion with your accountant. I know a number of accountants and they all have different approaches and opinions when it comes to various tax saving “strategies”. The structure below may not work for each realtor (based on your specific situation) and/or your accountant’s position on the issue.

One of the most frequently asked questions I get as a real estate and estate planning attorney is: Should I transfer my investment rental property into a limited liability company (LLC)? The answer is very simple. YES! Why you ask? If you own a rental property in your individual name and someone is seriously injured on the property, many of your personal assets are exposed. In other words, a lot of what you have worked for your entire life could be taken away in an instant if you are sued in your individual name and found liable. By having the rental property in an LLC, your personal assets are protected.