cash value. Some also include loss of rental income. However, insurance might not cover all costs, and it doesn’t keep lawsuits away, so even with good coverage, your personal assets might be in danger. Setting up an LLC can cost anywhere from $50-$150 if you register through your state, up to several hundred dollars using a company like LegalZoom, or up to $2,000 if you use an attorney. There might also be annual fees and taxes, depending on your state. Also, keep in mind the LLC doesn’t pay taxes — the owner does. However, if there are multiple owners, the LLC has to file its own taxes, which might cost more money, depending on if you pay someone to do your taxes. LLCs can also be set up as an S- Corporation or a C-Corporation. This might reduce self- employment taxes, but you should talk with a professional to see which setup is best for you. In any case, it's best if BOTH your tax advisor and attorney are well-coordinated, and communicating with each other regularly. You don't want great stand-alone legal advice which inadvertantly creates more tax consequences later on. A few things to keep in mind regarding LLCs and real estate: If you set up an LLC after you already own a rental property that has a mortgage, it’s possible that property can’t be part of the LLC. Lenders might think it’s a sale, which would mean you’d have to pay whatever’s left on your mortgage. Other possibilities are losing a low interest rate or maybe even losing your mortgage altogether. This doesn’t mean any of these things will happen, but it shows why it’s so important to know the requirements ahead of time!
Second, you should never use your LLC money to pay for something personal or your personal money to pay for
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