Exploring the benefits of a Rental Property LLC in Georgia? Find out how this legal structure can safeguard your real estate investments and provide valuable tax advantages for property owners and investors. Dive deeper into the advantages of setting up an LLC for your rental properties in the Peach State.
Whether you have a vacation rental, residential home, commercial space, or apartment building, you might not think of yourself as a business when you’re considering renting a property out to someone else. But the truth is you’ll be entering into contracts, collecting revenue, and managing expenses just like any business, and your tenants can sue you if things go wrong, just like any business. It’s a good idea to take advantage of legal protections, like forming a limited liability company (LLC).
If you’re thinking about forming a real estate business, a limited liability company (LLC) can help protect your investment property and your personal assets. An LLC is relatively easy to start and maintain, and we can help you start one in minutes with our Georgia LLC Formation Service.
Our experts know how to form an LLC in Georgia. When you form your business with our services, we’ll guide you through these five simple steps:
Businesses in the state are required to appoint a registered agent. This person is responsible for receiving important documents on behalf of the LLC, such as state correspondence and legal notices. If you need a registered agent, we can help you find one.
To officially form your rental property LLC, you need to file Articles of Organization with the right state office and include the appropriate filing fee.
Your LLC’s Operating Agreement is one of your most important business documents. It governs how your LLC runs and provides instructions for anything from voting procedures to dissolve the company. If you’re not sure how to create an Operating Agreement, we offer templates that can serve as a guide.
The IRS assigns businesses a nine-digit EIN that is used to identify their enterprise. Having one is necessary for certain business matters, such as opening a business bank account, hiring employees, and getting financing. You can apply for an EIN yourself on the IRS’s website, or we can do it for you with our EIN service.
Once your LLC is registered, you’re ready to transfer your rental properties to the LLC. You’ll need to file the deed with the clerk in the county where the property is located. In many states, when you transfer a property you’ll pay a transfer tax. However, Georgia law exempts a transfer to your LLC from the transfer tax, as long as you are the majority owner of the LLC.
One important thing to note is that you need to inform your lender of any ownership change if you have a mortgage or loan on the property. Because the business now manages the property, the lender may want to rework the terms of the loan, including your rate. Be prepared for this and notify your lender as soon as possible.
Finally, after you transfer the property, remember to update your lease agreements to show the ownership change. If you already have renters, you’ll also want to inform them. In addition, you’ll need to change the current lease agreements to reflect the LLC as a party to the contract.
If you’re considering forming a limited liability company for your real estate business, here is what you need to know. In short, they can save you money. Yes, you have to pay an initial formation fee and annual maintenance fees for your LLC. But ultimately it’s worth the fees because the LLC provides you with protection from personal liability. An LLC protects you from being held liable for any debts incurred by the business. Additionally, you can deduct business expenses from your tax return.
The most significant benefit of creating an LLC for rental properties in Georgia is liability protection. If a tenant or contractor files a lawsuit against you for debts or injuries incurred on the property, they must sue the LLC before they can reach your personal assets. To maintain this protection, you should keep the rental income separate from your personal expenses. This means you should keep separate bank accounts and records for your investment properties. If you co-mingle business and personal assets, it’ll be easier for a court to hold you personally liable for the business’s debts.
Keeping your business and personal assets separate also helps at tax time. LLCs use “pass-through” taxation. When you file your tax return, LLC owners report the business’s profits and loss on their individual returns. This means that you’ll pay your individual tax rate rather than the corporate tax rate. And if you’ve kept track of your business expenses, you can deduct them from the tax you’ll owe at the end of the year.
The series LLC is a popular business form for real estate investors because it allows you to segregate the holding of each of your properties into different “series.” Each series is treated as a separate company under the umbrella of the “Master” LLC. This segregation protects each of your properties from the obligations of the others. Many states allow for the formation of a series LLC, but unfortunately, Georgia isn’t one of them. However, if you think you’d benefit from a series LLC, you can form your business in a state that allows series LLCs and then register it in Georgia as a foreign LLC.
Any person who wants to lease property in Georgia can benefit from an LLC. If you’re looking to establish or continue renting vacation or residential properties, an LLC can offer you some peace of mind. It’s easier to create your LLC before you start buying properties because the deed will be in the LLC’s name. But if you’re already renting, there are only a few important steps to transfer the property to your new LLC. Those steps are outlined in the section below.
We understand the benefits of forming a rental property LLC in Georgia, but formation is just the start. We’ll be there to support you while you focus on the day-to-day affairs of the business. When you use our Worry-Free Compliance Service, we’ll keep your important documents on your dashboard for you to easily access any time you need them. We’ll also send you reminders for important legal deadlines, like your annual report and taxes. And if you try our business plan template for small businesses we’ll help you identify your goals and meet them faster. Using our business services will help you start your business and keep it in compliance with state law.
Disclaimer – The content on this page is for informational purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
The benefits of creating an LLC for your rental property include protection from personal liability, separation of your business and personal assets, and the ability to deduct business expenses from your tax return.
Your LLC needs a unique name from any other Georgia business. It must also contain the words “limited liability company” or “limited company” or the abbreviation “L.L.C.,” “LLC,” “L.C.,” or “LC.” You can abbreviate the word “limited” as “ltd.” and the word “company” as “co.”
You need to register your LLC in the state where you are doing business. If you only collect rental income from property in Georgia, the state considers you to be doing business in Georgia — and you should form your LLC in Georgia. Unless you have a rental property in your home state, you shouldn’t need to register as a foreign entity.
Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
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