I am in WA state and bought a rental house in my name, then formed an LLC for the said protections to handle the rental property. Yes, I heard that it was better for the LLC to buy the property in its name, but things don't always happen in perfect order. Some experts suggest that it would be necessary to transfer the house to the LLC name in the title to properly separate it from personal property, however I have doubts that the extra expenses and troubles would make a difference from legal or tax perspective. I think this is what I read from Carl's response, and I also heard from a lawyer and accountants I worked with. You can't even buy a second house as personal (2nd or vacation home) if it is closer than 250 miles to your primary residence, it is automatically considered "investment property". My accountant has set up the house purchase in QuickBooks same way as it was a pure LLC purchase, and we make every effort to treat this this as a separate business entity.
IMO, there is no way to implement a perfect separation - it is a philosophical category that there is no way to achieve a 100% purity in anything. Everybody understands the realities of a small business, if you invest too much (time and monetary) into separation then it may not worth to do that business. Even if you did everything perfect, even a young lawyer will be able to find that "one thing"; and if the judge looks at a case from a perspective that you capitalist just have to share with the poor - nothing you can do. On the other hand, if the focus is on the case, and everyone acts in good faith, that "one thing" should not matter. It would be really good to follow an objective set of rules, rather than know that no matter what you do, it depends on how the court looks at it.
