You will miss out on the home sale exclusion when you sell the home. Any mortgage company will probably stop the sale for others (I understand this is a cash deal so you also miss out on interest expense deductions that would be deductible on a mortgage). Don't forget some states will tax an LLC, examples are California and NY. An LLC is a flow through entity otherwise and reported on a personal return. A multi member LLC (divorce is another issue, non-community property states other issues) has to file Form 1065, U.S. Return of Partnership Income annually with the IRS. The LLC must also give each owner a completed Schedule K-1 by March 15 of each year. Each owner will attach their Schedule K-1 to their personal income tax return that’s filed with the IRS. It will still flow to the Schedule E for the rental portion and have same limitations. Again, once there is income, it is not longer passive too. Most CPA's will tell you to stay clear.
The LLC can also file as a C corp but 21% federal tax. Or an S corp still a pass through.
Again, you never know what tomorrow tax law will bring.
**I don't work for TT. Just trying to help. All the best.
***Say "Thanks" by marking as BEST ANSWER and clicking the thumb icon in a post and that I solved your question
**Mark the post that answers your question by clicking on "Mark as Best Answer" I am NOT an expert and you should confirm with a tax expert.
