An LLC is a popular way to hold rental property, but it is not free of drawbacks. Knowing them up front helps you decide whether one truly fits your situation.
Cost and upkeep
Forming an LLC has setup costs, and Florida charges an annual report fee to keep it active. You also have to maintain it properly—separate bank accounts, clean records—or you can lose the liability protection you paid for.
Financing and transfer hurdles
Lenders often treat LLC-owned property as commercial, which can mean higher rates or fewer options. And transferring a mortgaged property into an LLC may trigger the loan’s due-on-sale clause and Florida documentary stamp tax.
The homestead trap
Putting your primary residence into an LLC forfeits Florida’s powerful homestead protections and tax benefits—almost never worth it. LLCs are for investment and rental property, not your home.
The right structure depends on your goals. See our overview of putting a rental in an LLC, or contact Hochberger Law to weigh the trade-offs.
This article is general information about Florida law, not legal or tax advice. Please consult a Florida attorney about your specific circumstances.