Leasing real estate owned personally to a limited liability company (LLC) owned by the same individual is a legally permissible strategy often employed for asset protection and potential tax advantages. This involves a formal agreement where the individual, acting as the landlord, rents the property to the LLC, acting as the tenant, under specific terms and conditions, including defined rent payments.
Establishing this type of landlord-tenant relationship can offer distinct advantages. It creates a legal separation between personal assets and business liabilities. Rental income generated can offset business expenses, potentially impacting tax liability. Furthermore, this arrangement provides a documented business expense for the LLC and allows for potential depreciation deductions. Careful consideration of legal and tax implications is crucial before implementing such a strategy, as regulations can vary depending on jurisdiction and individual circumstances.