liquid1010
11-14-2009, 01:24 AM
I apologize if this has been discussed, I could not find anything. When considering the purchase of a rental property - what are the benefits of an LLC or a personal purchase? I've looked through a lot of this, but wanted to make sure I've thought it through - so thoughts would be great.
I understand the risk mitigation inherent in an LLC, but if you have minimal capital at start-up you will have to undersign personally anyways - so that becomes a minimal issue.
What about cashflow and tax issues? Assuming the property creates positive cash-flow, the lower tax rate in LLC is a benefit for retaining capital. I presume if I was looking to take out capital constantly personal would be better as no double taxation exists. If capital is retained in the LLC and only paid out in dividends - the LLC would be a better option.
Anyone have any first-hand experience with this?
I understand the risk mitigation inherent in an LLC, but if you have minimal capital at start-up you will have to undersign personally anyways - so that becomes a minimal issue.
What about cashflow and tax issues? Assuming the property creates positive cash-flow, the lower tax rate in LLC is a benefit for retaining capital. I presume if I was looking to take out capital constantly personal would be better as no double taxation exists. If capital is retained in the LLC and only paid out in dividends - the LLC would be a better option.
Anyone have any first-hand experience with this?