Setting up an LLC for Real Estate Asset Protection - Best Structure for Tax Filing?

Thanks for the clear explanation. If we go with the single-member LLC route with just one spouse as the owner, would the other spouse still be protected from liability? Also, does it matter which spouse is the official owner of the LLC?

For liability protection, only the spouse who owns the LLC would have direct protection from the LLC structure. The non-owner spouse could potentially still face liability exposure in certain situations. Which spouse should own the LLC depends on various factors including which spouse is more active in managing the property, your overall asset distribution, and state-specific marital property laws. In community property states, this gets more complex. I'd recommend consulting with an attorney familiar with real estate and asset protection in your state.

Does the tool actually provide legal advice about forming the LLC? Or is it just for the tax implications? We're trying to figure out both the asset protection and tax sides.

I'm skeptical about AI tax tools. How accurate is it with state-specific LLC laws? Some states have very different rules about charging order protections and series LLCs.

It doesn't replace legal advice for forming the LLC itself - you'd still need a lawyer for the actual formation documents and operating agreement. It focuses on analyzing the tax implications of different entity structures based on your specific situation. It does include state-specific tax analysis and flags issues where state laws might create complications. For example, it identified that in our state, a married couple can elect to treat a jointly-owned LLC as a disregarded entity rather than a partnership in certain circumstances. Always good to verify with a local attorney, but it gave us a solid starting point for those conversations.

Wait, how does this actually work? Do they have some special connection to the IRS or something? I've been on hold for hours trying to get answers about my LLC tax ID.

Sounds like a scam. No way anyone can magically get you through to the IRS faster than the regular phone system. They probably just take your money and put you on hold like everyone else.

They use technology that navigates the IRS phone tree and waits on hold for you. When they reach a human agent, you get a call connecting you directly to that person. No special connections or backdoors - they're just automating the painful waiting process. I was skeptical too honestly - it seemed too good to be true. But I was desperate after trying for weeks. It works because they're basically just waiting on hold for you, then they connect you when an actual human picks up. Saved me hours of hold music.

That's really interesting - I hadn't considered using a trust. Would this approach still allow us to report everything on Schedule E? And does it matter if we're in a community property state? (We're in Arizona

Yes, with proper structuring, you could still report the rental income on Schedule E because the single-member LLC would remain a disregarded entity for tax purposes. Arizona being a community property state actually gives you some additional options. In community property states, married couples can sometimes form a single-entity LLC that's treated as a disregarded entity rather than a partnership for federal tax purposes, even with both spouses as members. This is because community property can be viewed as a single economic unit. I'd recommend consulting with a local attorney familiar with Arizona's specific community property laws to explore this option.

You're making an excellent point. We have 2 properties and pay about $800/year in LLC fees plus extra accounting costs. Our CPA actually recommended just getting a $2M umbrella policy instead for our next property since we're in a state with high LLC maintenance fees.