Do you already rent property in the Sun Valley, Idaho area or do you plan on purchasing an investment property? Holding your property in an LLC can protect your personal assets in the event of litigation. Read these tips for renting real estate in Ketchum, Idaho for nightly or long term rentals.
Hold Your Property in an LLC
Holding your rental property in an LLC will protect your personal assets if a tenant should sue you. Holding your rental property in a trust will not protect your personal assets in litigation. LLC’s are quite easy to create with the Idaho Secretary of State.
Obtain A Tax Identification Number
Once your LLC is established you will need to obtain a tax identification number and open a checking account in the name of the LLC. Detailed instructions on creating your LLC and obtaining a Tax ID for Idaho businesses can be found here: Idaho Business.
I Hold My Property in a Trust; Does This Protect Me?
A trust can provide you some privacy, but it will not protect your assets in litigation. To protect your personal assets you will need to form an LLC and have the trust hold a 50% or greater membership interest in the LLC.
Rental Agreements for a LLC
Rental agreements will need to be made between the tenant and your LLC. All payments for the rental will be made to the LLC and deposited in the LLC’s bank account. It is important to avoid “mixing” funds when managing real estate in Ketchum Idaho.
Update Insurance, Utilities, Property Deed and Mortgage
The “owner” of your rental property will no longer be in your name or trust, but rather your LLC. Make sure you update the owner name with a title company or the county recording office to place the property deed in your LLC’s name.
Update the property owner with your insurance and utility providers.
Update the property owner with your mortgage provider.
Notify your Accountant
Have a discussion with your accountant regarding your LLC. The tax filing will change and you will need to keep accurate records of bank statements, expenses and rent received. Your LLC will need to be renewed with the state annually.
Owning real estate in Ketchum Idaho can be a great investment but it is important to protect your personal assets with your income property.
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