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Should I use an LLC/S-Corp for purchase of recreational property
Posted on 12/18/17 at 12:51 pm
Posted on 12/18/17 at 12:51 pm
I am looking at purchasing some property for me and my family to hunt on and for general outdoor activities. Its about 65 acres and there are some CRP payments (about $6K) coming in every year. Is there any benefit/downside to purchasing the property through an LLC or S-Corp.
5
Posted on 12/18/17 at 1:29 pm to snake2985
At that level there isn't going to be worth it to do an S Corp.
Are you going to be the sole purchaser? If you and other family members are going to buy it, an LLC might facilitate a later sale down the road.
Are you planning on leasing it out or doing other things on it to generate income? If so, an LLC would make some sense.
If it's simply going to be you as the single owner and it's all for personal use... there is no tax reason to do an LLC. From a liability aspect, an LLC may be helpful just in case someone get shot or something.
Are you going to be the sole purchaser? If you and other family members are going to buy it, an LLC might facilitate a later sale down the road.
Are you planning on leasing it out or doing other things on it to generate income? If so, an LLC would make some sense.
If it's simply going to be you as the single owner and it's all for personal use... there is no tax reason to do an LLC. From a liability aspect, an LLC may be helpful just in case someone get shot or something.
Posted on 12/18/17 at 1:43 pm to snake2985
All my family land is owned through the family LLC. Helps with inheritance and all that legal mumbo jumbo that I don't understand.
Maybe in a few decades when I take the reins I can tell you more about the pros/cons
Maybe in a few decades when I take the reins I can tell you more about the pros/cons
Posted on 12/18/17 at 2:21 pm to LSUFanHouston
The property will only generate modest income from the CRP over the next 15 or so years.
I will be the sole purchaser.
I have no plans to lease the property to anyone else, at least not now.
I will be the sole purchaser.
I have no plans to lease the property to anyone else, at least not now.
Posted on 12/18/17 at 7:44 pm to snake2985
Yes form a llc and talk to your CPA, but you are now a farmer, a tree farmer, I assume you have trees that you will one day cut and sell, you are in the tree business. Meanwhile, while you are operating your tree farm you will have business expenses, tractor, 4 wheeler, interest, property tax, insurance, mileage to and from your house to check on your farm, etc, check with your CPA and address what may be deducted
This post was edited on 12/18/17 at 7:52 pm
Posted on 12/18/17 at 7:54 pm to Tigerpaw123
While there are accounting things to take place, if there is a single person that owns it the LlC won't change anything as any expenses/ income would pass through on your personal return as far as I know.
The reason to do an LLC is for liability reasons, to separate yourself and your assets from the property. Given, as sole owner I'm not sure how much that truly protects you from a very good lawyer anyway.
I'm not a lawyer, but my understanding is if you are the sole owner, decision maker, and only 'employee' the LLC only does so much. It helps you if there's a liability by say a vendor or contractor or a family member doing work themselves, but as sole owner if you say decide not to repair a bridge and someone's 4 wheeler falls off and they get hurt, you can't just waive a piece of LLC paper and say nanny nanny boo boo.
But, if you hire a contractor and that contractor sucks at repairing the bridge then the LLC offers protection as they are a third party that screwed up.
The reason to do an LLC is for liability reasons, to separate yourself and your assets from the property. Given, as sole owner I'm not sure how much that truly protects you from a very good lawyer anyway.
I'm not a lawyer, but my understanding is if you are the sole owner, decision maker, and only 'employee' the LLC only does so much. It helps you if there's a liability by say a vendor or contractor or a family member doing work themselves, but as sole owner if you say decide not to repair a bridge and someone's 4 wheeler falls off and they get hurt, you can't just waive a piece of LLC paper and say nanny nanny boo boo.
But, if you hire a contractor and that contractor sucks at repairing the bridge then the LLC offers protection as they are a third party that screwed up.
This post was edited on 12/18/17 at 8:27 pm
Posted on 12/19/17 at 8:33 am to snake2985
S-corp wont do anything for you. You will file a Sch F for the tree income/expenses.
The LLC may give you some liability protection but make sure you don't commingle the funds.
The LLC may give you some liability protection but make sure you don't commingle the funds.
This post was edited on 12/19/17 at 8:33 am
Posted on 12/19/17 at 9:11 pm to Tigerpaw123
quote:
talk to your CPA, but you are now a farmer, a tree farmer,
Great advice.
Posted on 12/20/17 at 9:16 am to Creamer
If it is truly a business fine, but if you try to borrow against it to build a camp, a 2nd home, etc. it will be a pain in the arse and no conventional financing for you. It really depends on what you use it for as listed earlier.
Posted on 12/20/17 at 9:01 pm to snake2985
why not purchase property under one llc and lease to another llc? writing off expenses owned to one old to blow out income from leasing to other llc. other llc is tree farming land leasing at a great rate.
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