Article: Limited Liability Companies (LLCs) for Rental Real Estate Properties

Imagine that someone injures themselves in your home. If that person brings a lawsuit against you, they can go after your personal assets—your home, your investments, your savings accounts, etc.

The same holds true for injuries that occur on rental properties. For many people, however, rental properties are a business investment, and thus, they don't want liabilities arising out of that business to affect their personal assets. If you are one of those people, you may want to consider setting up a limited liability company (LLC) for your rental property business.

Legal Benefits of an LLC for Rental Properties

An LLC is a separate legal entity, and therefore, when an LLC holds your rental properties, it separates you, personally, from your business. Therefore, if your rental properties are owned by an LLC, any legal claims arising out of those rental properties can be brought only against your interest in the company and the company's assets. Your personal assets remain protected.

Further, if you own more than one rental property, you may want to consider putting each property in its own LLC. That way, if a liability arises out of one of your rental properties, the effects of that claim will be limited to your interest in that specific property, alone, while your personal assets and interests in your other rental properties remain protected.

Tax Benefits of an LLC for Rental Properties

When you form an LLC, you can opt to be taxed as a sole proprietor. This allows any income generated from your rental properties to “pass through” your business to you, and you can pay taxes on that income as an individual. Additionally, unlike a corporation, because there is no separate tax on the LLC, you'll avoid double taxation of your income from your rental properties.

IIf you would like to discuss creating an LLC for your rental property or properties, please contact us for more information or to schedule an initial consultation.

Before you use an incorporation service or start your business without legal advice, please review our business packages or contact us. Services that simply create a new business entity for you do not provide legal advice. We have helped numerous clients who started a company without legal advice and then ended up with major problems down the road because they chose the wrong business entity type or tax structure, or did not know how to maintain their limited liability.

Review pricing & services: See our business packages

Ask questions or get started: Contact Us


1739 Clarendon Boulevard
Arlington, VA 22209






9:30 AM - 6:00 PM

Copyright © Ryan A. Brown, PLLC d/b/a Arlington Law Group - A Virginia Professional Limited Liability Company

This web site is designed for general information only.
The information presented at this site should not be construed to be formal legal advice nor the formation of a lawyer/client relationship.
Please see our terms of service for full information.

Designed by: Emphasis Creative