Creating a Rental Property in Wisconsin | From Investment to Income

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Wisconsin Rental Property LLC

In the world of real estate investing, creating a Limited Liability Company (LLC) for rental properties has become an increasingly popular strategy for property owners in Wisconsin. An LLC provides numerous benefits, including limited liability protection, potential tax advantages, and improved professional credibility. This guide will walk you through the steps to Create a Rental Property LLC in Wisconsin, helping you navigate the process and ensuring your investment is well-protected and structured for success. From researching local laws and regulations to drafting a comprehensive operating agreement, we’ll provide you with the essential information to establish and manage your Rental Property LLC effectively.

To learn everything about creating a rental property in Wisconsin, Webinarcare Editorial Team recommends reading the whole article until the end.

How to Create a Rental Property LLC in Wisconsin

What is a Rental Property LLC?

A rental property LLC in Wisconsin refers to a limited liability company (LLC) formed specifically to own, manage, and rent out residential or commercial properties in the state. Starting an LLC in Wisconsin is popular with investors and property owners because they provide personal liability protection related to the property, separating the owner’s assets from any debts or legal issues that may arise concerning the property.

Creating a rental property LLC allows owners to manage their investments better, take advantage of potential tax benefits, and protect themselves from lawsuits or financial liabilities related to their real estate ventures. Wisconsin has its own regulations and filing requirements for establishing an LLC, so it is vital to research and complies with the specific rules and guidelines in the desired state of operation.

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It is suggested that you speak with a legal professional before you begin setting up a rental prorperty LLC. They’ll understand what’s best for you and your future company. To safeguard your personal assets from business debts, you can always start an LLC in Wisconsin.

– WEBINARCARE EDITORIAL TEAM

How to Create a Rental Property LLC in Wisconsin

To create a rental property LLC in Wisconsin, you must follow a few steps that include choosing a name for your LLC, hiring a Registered Agent, filing your Articles of Organization, transferring title to your Wisconsin LLC, and finally, updating the lease.

Step 1: Choose a Name For Your LLC

Selecting a name for your Wisconsin rental property LLC is essential to forming. Your business name should be unique, memorable, and reflective of your products or services. There is a complete guide on Wisconsin Business Name Search for you to have a proper LLC business name. 

In Wisconsin, your rental property LLC name must:

  • The business name should have the word LLC or L.L.C.
  • No confusion with a government entity name.
  • A unique name is needed with no match
  • Limit of restricted words that need a license. 

In Wisconsin, if you do not wish to file your LLC right away but want to hold the name that you have decided on, then you can reserve your LLC name for 120 days. You must file a name reservation application with the Wisconsin Secretary of State to keep the name. 

You can register your business under a different legal name if your preferred name isn’t available.  Once you have chosen a name, you can submit an application for Wisconsin DBA (doing business as). In this manner, you can choose any name you desire for your business. A DBA allows a company to operate under the name of the person or entity who owns it. If you have decided to file for a DBA, you can file it in two methods, by mail and in person.

However, before filing a DBA, you should know that you need to renew your DBA every ten years, which costs $15.

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Step 2: Choose a Registered Agent

The next step in forming a rental property LLC is hiring a Registered Agent who accepts legal paperwork for your business. This person or business will receive important tax forms, legal documents, all notices of lawsuits, and other official government correspondence in Wisconsin. Forming an LLC and creating a rental property for your LLC will be easier if you have a Registered Agent in Wisconsin. You can serve as your Registered Agent, or you can appoint a friend, family member or hire the Best Wisconsin Registered Agent Services.

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Step 3: File Your LLC’s Articles of Organization

The Articles of Organization for a rental property LLC is an important document to start your limited liability company (LLC). You must have a business establishment before you have a proper rental entity in Wisconsin. Wisconsin Articles of Organization is a simple document that contains the business name and address and the name and address of the person who received lawsuits on behalf of the organization. In Wisconsin, the filing fee is $130. 

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Step 4: Transfer Title To Wisconsin Rental Property LLC

Once you have formed an LLC for your Wisconsin rental property, transferring the property title to the LLC is crucial. This is an essential step to ensure that the benefits of operating your rental property through an LLC, such as limited liability protection and potential tax advantages, are fully realized.

Here are the key steps involved in transferring the property title to your LLC:

Prepare a Deed

To transfer the property title to your LLC, you must prepare a deed, a legal document conveying ownership of the property. The type of deed required for this transfer may vary depending on Wisconsin laws and the specific circumstances of your property. Common deeds include warranty deeds, quitclaim deeds, and grant deeds. 

  • If you transfer title through a quitclaim deed, you are passing any interest you might have in the property to your LLC. 
  • If you would like a warranty deed, it includes a guarantee that the title was good and free of any claims or interests by third parties. 

Record the Deed

Once the deed has been prepared, it must be recorded with your state’s appropriate county recorder or land registry office. Recording the deed is essential for completing the transfer of the property title to the Wisconsin LLC and ensuring that the change in ownership is part of the public record. 

Update Property Insurance

After transferring the property title to your Wisconsin LLC, you will need to update your property insurance policy to reflect the change in ownership. Contact your insurance provider to inform them of the change and ensure that the LLC is listed as the property owner on the policy. This is crucial for maintaining proper coverage and protecting your investment.

Notify Your Mortgage Lender

If you have a mortgage on the property, it is essential to notify your mortgage lender of the change in ownership. Some lenders may require you to obtain their approval before transferring the property title to an LLC. Additionally, be aware of the “due-on-sale” clause in your mortgage agreement, which the transfer of property ownership may trigger. Sometimes, lenders may enforce this clause and require you to pay off the mortgage immediately. However, this is only sometimes the case, and many lenders may allow you to proceed with the transfer without issue.

Step 5: Update And Amend The Lease

Moreover, as soon as you sort out the kind of deed you want in your rental property LLC in Wisconsin, you should sign and record the deed to draft and amend your lease. 

A fast and simple solution to minimize your liability for claims about the property is to transfer the property to an LLC in Wisconsin. But changing the title to your property shouldn’t be your actual plan. Also, speaking with an insurance agent and securing enough liability insurance to pay for any potential claims is important. This ensures that rent payments and other responsibilities are directed to the Wisconsin LLC rather than you.

Step 6: Getting Permits And Licenses

When you get a rental property LLC in Wisconsin, it is mandatory to get permits and licenses from the Wisconsin Secretary of State. Any permits and licenses you obtain for your Wisconsin rental property LLC must be updated and compliant with the local city/county authority. 

Cost to Form an LLC in Wisconsin

The cost to form an LLC in Wisconsin can vary depending on several factors, such as Wisconsin filing fees, Registered Agent fees, and any additional services you may require. Here’s a breakdown of the typical costs associated with forming an LLC in Wisconsin:

State Filing Fees

The state filing fee is the primary expense when forming an LLC in Wisconsin. This fee is paid to the Wisconsin Secretary of State to process your LLC formation documents, such as the Articles of Organization. The filing fee typically costs $170 (by mail and $130 online), while the LLC annual fee is $25.

Read the Wisconsin LLC Cost to know more about the specific cost.

Registered Agent Fees

Most states, including Wisconsin, require an LLC to designate a Registered Agent. A Registered Agent is a person or company responsible for receiving legal and official documents on behalf of the LLC. You can act as your own Registered Agent or hire a Registered Agent. These services typically charge an annual fee, ranging from $50 – $150, depending on the level of service provided.

Operating Agreement

While not always required by state law, creating an Operating Agreement for your Wisconsin LLC is highly recommended. An Operating Agreement outlines the LLC’s management structure, ownership percentages, and other details. You can draft an Operating Agreement, use an online template, or hire an attorney to create a customized agreement. The cost of an operating agreement can range from minimal (if using a free template) to several hundred dollars or more (if hiring a business attorney).

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Business Licenses and Permits

Depending on your Wisconsin business activities and location, you may need to obtain Wisconsin licenses. The costs for these licenses and permits will vary depending on the license type, the issuing authority, and the location of your Wisconsin business. However, in Wisconsin, the business license fee ranges from $50 – $300.

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Annual Report and Taxes

Some states, including Wisconsin, may require LLCs to pay Annual fees or taxes. These fees include Annual Report filing fees, franchise taxes, or other state-specific fees. In Wisconsin, here are the following costs.

  • Annual Report Filing Fee- $25
  • Franchise Tax Fee- No franchise tax
  • Sales Tax Fee- $20

Optional Services

You may utilize additional optional services when forming an LLC, such as hiring a professional formation service, obtaining an Employer Identification Number (EIN) in Wisconsin, or registering your business name as a trademark. These services range from free (obtaining an EIN) to several hundred dollars.

Benefits of Creating a Rental Property LLC

Creating a Limited Liability Company (LLC) for rental properties in Wisconsin offers several benefits. Wisconsin LLC is a business structure that combines a partnership’s flexibility with a corporation’s limited liability protection. Here are some key advantages of establishing an LLC for your rental properties:

Limited Liability Protection

One of the main benefits of creating an LLC for rental properties is its limited liability protection. As an LLC owner, your assets are protected from the debts and liabilities of the rental property. Should any legal issues arise, such as a tenant lawsuit or property damage claim, your assets, such as your home, personal bank accounts, and other investments, are generally not at risk.

Tax Advantages

LLC offers potential tax benefits for rental property owners in Wisconsin. By default, an LLC is considered a pass-through entity, meaning the profits and losses from the rental properties pass through to the owners’ tax returns. This avoids the double taxation that occurs with corporations. Additionally, rental property owners may take advantage of tax deductions for expenses related to the property, such as mortgage interest, property taxes, maintenance, and repairs.

Easier Management

Managing rental properties through an LLC can simplify ownership and make it easier to manage multiple properties. You can streamline bookkeeping, tax reporting, and other administrative tasks with an LLC. If you own multiple rental properties, you can consolidate them by creating a Single-Member LLC in Wisconsin.

Professional Image

Operating your rental properties through an LLC can enhance your professional image and credibility with tenants, lenders, and other business partners. It demonstrates that you are serious about your real estate investments and are committed to maintaining high standards of professionalism and business practices.

Flexibility in Ownership and Management

Wisconsin LLC offers flexibility in ownership and management structures. You can have multiple members in your Wisconsin LLC, allowing you to bring in partners or investors. Additionally, an LLC can have different classes of membership interests, enabling you to allocate profits and losses in various ways among the members.

Estate Planning Benefits

Wisconsin LLC can provide estate planning benefits for rental property owners in Wisconsin. Transferring rental properties into an LLC allows you to pass ownership interests to your heirs without probate easily. This can simplify transferring assets and minimize potential disputes among beneficiaries.

FAQs

What is an LLC?
LLC stands for Limited Liability Company, a popular business structure that limits the personal liability of its owners.
Can I form an LLC in Wisconsin for my rental property business?
Yes, you can form an LLC in Wisconsin for your rental property business.
What are the advantages of forming an LLC for my rental property business in Wisconsin?
An LLC offers personal liability protection, pass-through taxation, flexibility in the management and ownership of your company, and much more.
What are the legal requirements for forming an LLC in Wisconsin?
To form an LLC in Wisconsin, you must file Articles of Organization with the state, appoint a resident agent, and pay the associated fees.
Do I need a lawyer to form an LLC in Wisconsin?
No, you do not need a lawyer to form an LLC in Wisconsin. However, it may be advisable to consult with a lawyer to ensure the process goes smoothly and to address any legal questions you may have.
Can I form an LLC for my rental property business in Wisconsin if I live in another state?
Yes, you can form an LLC for your rental property business in Wisconsin if you live in another state.
What does it cost to form an LLC in Wisconsin?
The cost of forming an LLC in Wisconsin varies by state, but in general, you can expect to pay a filing fee to the Secretary of State and possibly additional fees for other requirements.
How long does it take to form an LLC in Wisconsin?
The timeframe for forming an LLC in Wisconsin can vary depending on many factors, such as the completeness of your filing, the processing time of the Secretary of State’s office, and any other requirements that must be completed.
Can I form an LLC online in Wisconsin?
Yes, you can form an LLC online in Wisconsin by using the Secretary of State’s online filing system.
What paperwork is required to form an LLC in Wisconsin?
To form an LLC in Wisconsin, you must file Articles of Organization with the state, identify a registered agent for your business, and pay associated fees and costs.
Do I need to register a DBA for my rental property LLC in Wisconsin?
If you plan to do business under a different name than your LLC’s legal name, you may need to register a DBA (Doing Business As) in Wisconsin.
Do I need to obtain any business licenses or permits to operate my rental property LLC in Wisconsin?
Depending on the location and type of your rental property, you may need to obtain various licenses and permits to operate your rental property LLC in Wisconsin. It is essential to research specific city and county regulations to ensure compliance with local laws.
How do I file taxes for my rental property LLC in Wisconsin?
As an LLC with a sole proprietorship or partnership structure, your rental property LLC will typically file a separate Schedule C along with your federal and state tax returns. C corporations file a separate tax return and will need to consider their rules.
Can my rental property LLC own multiple properties?
Yes, your rental property LLC can own multiple properties across Wisconsin.
How do I maintain my rental property LLC’s legal status in Wisconsin?
To maintain your rental property LLC’s legal status in Wisconsin, you must file annual reports and pay annual fees as required by the state.
What are the personal liability implications of forming an LLC for my rental property business in Wisconsin?
Forming an LLC for your rental property business in Wisconsin shields your personal assets from business-related liabilities.
Can an LLC manager be an out-of-state resident for my rental property LLC in Wisconsin?
Yes, an LLC manager can be out-of-state for a rental property LLC in Wisconsin.
Can an LLC member also act as a registered agent for my rental property LLC in Wisconsin?
Yes, an LLC member can act as a registered agent for your rental property LLC in Wisconsin.
How do I simplify my rental property reporting through an LLC in Wisconsin?
You can simplify your rental property reporting through an LLC in Wisconsin by keeping all necessary records, utilizing state services, and engaging professional help.
What types of business insurance do I need for my rental property LLC in Wisconsin?
As a rule, however, you should consider liability insurance, landlord’s insurance, and workers’ compensation insurance, among others, for your rental property LLC in Wisconsin.
Can I dissolve my rental property LLC in Wisconsin?
Yes, you can dissolve your rental property LLC in Wisconsin by filing dissociation and termination is required.
How do I transfer ownership of my rental property LLC in Wisconsin?
The transfer of ownership rights and property interests can be achieved through restructuring under a robust transition system in Wisconsin.
Are there any annual reporting or maintenance requirements for a Wisconsin LLC?
LLC owners have to file annual reports based on registration validity and operating status to keep the Secretary’s online system notified about changes.
Are there any naming requirements when I’m registering for an LLC in Wisconsin?
Yes, your LLC names should adhere to some specific requirements, as established by the State of Wisconsin administrators.
How do I open a bank account for my rental property LLC in Wisconsin?
Having access to all necessary ID or authorization documents, you can go to your bank of choice and set up an account for your rental property LLC in Wisconsin.
Do I need to file an annual report for my rental property LLC in Wisconsin?
Yes, you will have to file an Annual Report based on registration validity and operating status in Wisconsin.
Can anyone access my rental property LLC’s records in Wisconsin?
Public electronic format documentation of filings is available through Wisconsin DFI companies Branch.
Do I have to appoint a registered agent for my rental property LLC in Wisconsin?
Yes, you need to appoint, known as Wisconsin registered your agent and authorized to receive messages during monthly LLC compliance notices.
What is an LLC in Wisconsin?
An LLC in Wisconsin is a limited liability company that is designed to protect the personal assets of its owners and provide tax advantages for pass-through entities.
How do I create a rental property LLC in Wisconsin?
You can create a rental property LLC in Wisconsin by filing Articles of Organization with the Wisconsin Department of Financial Institutions and complying with the state’s legal and regulatory requirements for LLCs.
What are the filing fees for creating a rental property LLC in Wisconsin?
The filing fee for creating a rental property LLC in Wisconsin is $130.
What are the advantages of creating an LLC in Wisconsin for rental properties?
The advantages of creating an LLC in Wisconsin for rental properties include limited liability protection for the owners, pass-through taxation, and greater flexibility for management and ownership.
Do I need a registered agent for my rental property LLC in Wisconsin?
Yes, you are required by law to appoint a registered agent when creating a rental property LLC in Wisconsin.
Can I act as my own registered agent in Wisconsin for my rental property LLC?
Yes, you can act as your own registered agent for your rental property LLC in Wisconsin.
How do I get a Wisconsin business tax ID number for my rental property LLC?
You can obtain a Wisconsin business tax ID number for your rental property LLC by registering with the Wisconsin Department of Revenue.
What are the requirements to qualify to create an LLC in Wisconsin?
To qualify to create an LLC in Wisconsin, you must be at least 18 years old, provide a valid street address, and have a relevant business purpose.
Can I register my LLC in Wisconsin online?
Yes, you can register your LLC in Wisconsin online through the Wisconsin Department of Financial Institutions’ website.
What documentation do I need to provide when registering an LLC in Wisconsin?
When registering an LLC in Wisconsin, you need to provide Articles of Organization, the name and address of the registered agent, and the initial members’ names and addresses.
How long does it take to create an LLC in Wisconsin?
It usually takes around two weeks to create an LLC in Wisconsin.
Do I need an operating agreement for my rental property LLC in Wisconsin?
While an operating agreement is not legally required, it is highly recommended to have one for a rental property LLC in Wisconsin to set out management and ownership rules.
What is the initial organizing document for an LLC in Wisconsin?
The initial organizing document for an LLC in Wisconsin is the Articles of Organization.
How often do I need to renew my rental property LLC in Wisconsin?
You need to file an annual report and pay the annual fee to renew your rental property LLC in Wisconsin.
What is the fee for returning a filed document within two business days in Wisconsin?
The fee for returning a filed document within two business days in Wisconsin is $25.
Do I need to file a separate state tax return for my rental property LLC in Wisconsin?
No, rental income from the LLC is reported on the owner’s personal state tax return in Wisconsin.
Do I need to register my rental property with the state of Wisconsin?
No, you do not need to register your rental property with the state of Wisconsin, but you may need to obtain certain licenses and permits.
What kind of insurance coverage do I need for my rental property LLC in Wisconsin?
You will need liability insurance to protect against potential damages and lawsuits resulting from rental activities in Wisconsin.
Do I need a business license to create a rental property LLC in Wisconsin?
Some Wisconsin cities and counties require a business license for rental properties, so you may need to obtain one depending on your location.
What fees are associated with obtaining a Wisconsin business license for a rental property?
The fees for obtaining a Wisconsin business license can vary depending on your municipality or county.
Is a rental property LLC protected against Wisconsin law that rent money should be paid into a designated account separate from landlord personal account?
Yes, a rental property LLC in Wisconsin is required to maintain separate financial accounts for the LLC and personal holdings, including rent payments.
Are there any rules governing security deposits for rental property LLCs in Wisconsin?
Yes, there are specific rules that govern security deposits for rental property LLCs in Wisconsin, including limits on deposit amounts and timeframes for returning deposits.
What are the LLC annual fees in Wisconsin?
The LLC annual fees in Wisconsin are $25.
How can I amend the articles of organization for my rental property LLC in Wisconsin?
You can amend the articles of organization for your rental property LLC in Wisconsin by filing Articles of Amendment with the Wisconsin Department of Financial Institutions.
Can I create a rental property LLC in Wisconsin that operates in other states?
Yes, you can create a rental property LLC in Wisconsin that operates in other states, but you will need to comply with both Wisconsin and the other state’s legal and regulatory requirements.
Does forming an LLC for rental properties provide naming protection in Wisconsin?
Yes, forming an LLC for rental properties provides naming protection in Wisconsin and ensures that other entities cannot use a similar or identical name.
Is it necessary to update an LLC agreement when adding a new property in Wisconsin?
Yes, it is necessary to update an LLC agreement when adding a new property in Wisconsin to reflect changes in ownership and management.
What is the Series LLC in Wisconsin?
The Series LLC in Wisconsin allows an LLC to create separate units or series, each with their assets and liabilities and potentially unique ownership and management structures, while giving them legal separation.
Can I transfer ownership of my rental property LLC in Wisconsin to a new owner?
Yes, you can transfer ownership of your rental property LLC in Wisconsin to a new owner using a written instrument and updating public records.

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Conclusion

Creating a rental property in Wisconsin requires careful planning, research, and execution. By following these steps, you can create a successful rental property that generates passive income and provides valuable housing to tenants. Remain diligent and proactive in managing your property to ensure long-term success in the competitive rental market. Ensure the details and records are accurate and precise with the previous filing documentation. And if you have any questions, share them in the comment section below.

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