1)Payments to the LLC OR the rental property manager.
2)Segregate income on per property basis on your books…this is simpler than having a separate set of books for each property.
3)Not a problem from a tax standpoint…but will create a lot of admin work and cost for no good reason.
I have bought a lot of your books in the past. I met with my accountant who advised that I set up a different checking account for each property in a Land trust and have my corporation have it own checking account which it does.
He advised that it is better for record keeping for me and him.
I’m currently using my corp as benefen. of the trust also and as property management on all the properties. Therrefore, all rent go into that account.
having five or six different accountswill be a pain when only for a conventional mortgage.
I think with true entities, (e.g.- LLC’s, etc.), you need a separate account for each to have the entity respected under state law. I do NOT think that such accounts are necessary for land trusts, and in fact, add complexity and cost. The account should be in the name of the beneficial owner (e.g.- LLC), because the SOLE purpose of the land trust is to hold title and NOT to collect payments…if the land trust engages in the latter activity, it risks being reclassified as a different type of entity for tax purposes.
If I may, I would like to follow up on Jim’s question. If I understand you correctly, you are saying to create a seperate land trust for each property you own. These would be “Land Trust A”, “Land trust B”, … etc. Then, are you saying that the SAME LLC or corp would be the beneficiary of each of these seperate land trusts. If I am correct in these assumptions, I have the following questions:
To whom would the rent payments be paid, the land trust or the LLC.
Assuming the answer to the above question is “the LLC”, then doesn’t this setup complicate things when it comes time to sell the property? I thought one of the reasons for having seperate entities was so that you could keep seperate spreadsheets to show to a potential buyer.
Would there be a problem with setting up an “Umbrella LLC” or “Umbrella partnership” which would own each of the LLC’s? Then, have a seperate land trust for each property AND seperate LLC as benificiary for each of the land trusts. My reasoning is that this would allow you to file one tax form (for the Umbrella LLC or Umbrella Partnership). Am I as confused about this as I think I am???
Thanks for your patience and time for all of us “newbies”!!!