Anyone have experience using LLC for family 2nd home?

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sandramjet
Posts: 231
Joined: Thu Oct 23, 2014 11:28 pm

Anyone have experience using LLC for family 2nd home?

Post by sandramjet » Thu Sep 29, 2016 10:22 pm

I'm curious if anyone has had experience using an LLC or similar approach as recommended in the book "Saving the family cottage" for managing a family cottage or second home? If so, I'd be interested in knowing about how difficult it was to set up, and whether it worked well or not? DId it resolve or prevent any family contentions, etc?

Thanks

sandramjet
Posts: 231
Joined: Thu Oct 23, 2014 11:28 pm

Re: Anyone have experience using LLC for family 2nd home?

Post by sandramjet » Sun Oct 02, 2016 6:16 pm

Or if anyone has used a trust instead, I would be interested in whether that was better.
Thanks!

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StevieG72
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Re: Anyone have experience using LLC for family 2nd home?

Post by StevieG72 » Sun Oct 02, 2016 8:34 pm

Fools think their own way is right, but the wise listen to others.

informal guide
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Re: Anyone have experience using LLC for family 2nd home?

Post by informal guide » Mon Oct 03, 2016 11:43 am

Two brothers and I set up a NJ LLC in 2013 for this purpose (none of us reside in NJ) that, indeed, owns a second house that our families share - one that was formerly owned outright by our late mother. We get along famously, but we set it up to memorialize decision making and facilitate transfers when one or more of us is no longer able to make decisions (we are in our 60s to 70s now and each have adult children who enjoy the house). Each branch of the family has one designated decision maker. There is a "put option" every 3 years; if one branch "puts" the other two have to buy out at appraised value or else the house is listed for sale and sold

With the aid of a lawyer, setting it up was simple - -we have an LLC agreement and an operating agreement.. Here are a few things I've learned: 1) we were able to transfer the property from the estate to the LLC without transfer taxes, in NJ; more importantly, transferring to the next generation doesn't require deed changes; 2)We hire a tax accountant to do the tax filings (we have a modest amount of rental income), at approx $500 per year; the second home losses and tax deductions flow through to the three of us. 3) We were able to get a residential mortgage on it, using my credit history and capacity. They come after me if the mortgage defaults (but I handle the LLC finances). 4) There is a an annual NJ filing fee of around $600.

So far, we are quite satisfied (including a member who is a lawyer).

sandramjet
Posts: 231
Joined: Thu Oct 23, 2014 11:28 pm

Re: Anyone have experience using LLC for family 2nd home?

Post by sandramjet » Sat Sep 22, 2018 4:02 pm

I realize this is an old thread... but I've discovered that doing this sort of thing doesn't move quickly if all family members aren't really motivated one way or another :annoyed

In any case, I think we have decided to go ahead and do this, and so far we've drafted an initial operating agreement, looked into what it costs to setup the LLC, etc. But one thing that I am still uncertain about is going to be doing the tax returns for the LLC. This is (hopefully) a very simple LLC, there will be no rental income, etc. The only income will be from an initial "endowment" of about 50k that our parents will provide (and any $$ it throws off in terms of interest, etc), and expenses will be taxes and upkeep. I've always done my taxes myself personally, while some of my siblings have always paid a CPA to do theirs... So of course, I was assuming that I could do the taxes at no cost to LLC, while the others are assuming it will cost a few hundred dollars a year. So, my question is ... how difficult is it to do taxes on my own for an LLC? Is there any reason (other than convenience) to pay a CPA for this (hopefully) simple LLC?

Thanks for any feedback!

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