How to Start a Real Estate LLC in Florida

A Florida real estate LLC costs $125 to file on Sunbiz and $138.75 a year to keep active. In return, a lawsuit tied to a rental property generally stays with the LLC instead of reaching your house, savings and other investments. The filing is the easy part. Moving a mortgaged property into the LLC, and keeping your finances separate afterward, is where investors get into trouble.

Why hold Florida rental property in an LLC?

Liability is the main reason. If a tenant gets hurt at your rental and sues, the LLC sits between that lawsuit and your personal bank accounts, your home and your other investments. It can work the other way too. A personal lawsuit against you, like one from a car accident, typically can’t reach assets held inside the LLC. That second layer is called charging order protection, and Florida has strong laws protecting LLC assets.

A few other benefits follow from the structure:

• Separating properties. Put properties in different LLCs and a disaster at one doesn’t put the others at risk.
• Easier transfers. You can sell membership interests, bring in partners or pass ownership to heirs without recording a new deed every time.
• A more professional look. Rent goes to “Main Street Properties LLC,” not to you personally, and leases look more formal.
• Some privacy. Florida does require disclosure of LLC owners on public filings, so an LLC won’t hide you. Using a registered agent service instead of your home address does keep that address off the public record.

How do you form a real estate LLC in Florida?

1. Pick a name that outlasts any one property

The name has to be unique among Florida business entities, include “LLC” or “Limited Liability Company,” and avoid restricted words like “Bank” or “Insurance” unless you hold the right license. Check availability on Sunbiz first. You can reserve a name for 120 days for $25, though most investors skip that and just file.

We’d keep the name generic, something like “Sunshine Property Holdings LLC.” A street address in the name looks tidy until you sell that house and still own the LLC.

2. Choose a registered agent

Every Florida LLC needs a registered agent with a physical Florida address to accept legal papers and state mail. You can be your own, but your home address goes on the public record and you have to be reachable during business hours. That’s why most investors use a commercial service. IncCraft’s registered agent service starts at $49 per year.

3. File Articles of Organization

File online through Sunbiz for $125. You’ll need:

• The LLC name
• Principal office address
• Registered agent name and address
• Names and addresses of managers or members (if manager-managed)
• An effective date, which can be up to 90 days in the future

Online filings usually process in 2-3 business days. Paper filings take 5-10.

4. Write an operating agreement

Florida law doesn’t require one. Every real estate LLC should still have one, because banks often ask for it when you open an account or apply for a loan, and title companies and lenders want it at closing. It should cover ownership percentages, how profits and losses are split, who makes decisions, what happens when a member wants out, the rules for adding properties or members, and buy-sell terms if a member dies or becomes incapacitated.

5. Get an EIN and open a bank account

The EIN is free from IRS.gov and comes back immediately online. You need it to open a bank account in the LLC’s name, and every rent check and repair bill should run through that account. Mixing personal and LLC money (“commingling”) can pierce your liability protection in a lawsuit.

6. Move existing property into the LLC

If you already own the property personally, you’ll record a warranty deed or quitclaim deed from you to the LLC, update the insurance so the LLC is named as owner and insured, update your property management records and tenant notices, and deal with your mortgage lender. That last part gets its own section below, because it’s the one that can backfire.

What does a Florida real estate LLC cost?

The low end assumes you file yourself and use a $49 registered agent. Most of the spread is attorney fees. A formation service like IncCraft costs far less than paying an attorney for the whole process.

Will transferring a mortgaged house trigger the due-on-sale clause?

Technically, yes. Most mortgages let the lender demand full repayment if you transfer ownership, and a deed to your LLC is a transfer. The Garn-St. Germain Act protects transfers to inter vivos trusts, but LLC transfers fall into a gray area. Many lenders don’t enforce the clause when the borrower stays a member of the LLC. Enforcement policies vary, though, and “many lenders” isn’t a promise from yours.

Your options:

1. Ask your lender for written consent before you transfer.
2. Transfer without telling the lender and accept the risk, which plenty of investors do.
3. Buy future properties directly in the LLC’s name.
4. Use a land trust with the LLC as beneficiary.

For new purchases, buy in the LLC’s name from the start. The LLC will need a commercial or portfolio loan, which typically carries a slightly higher rate than a conventional mortgage. For a house you already own with a mortgage, we’d get the lender’s consent in writing before recording anything.

How is a real estate LLC taxed?

By default, a single-member LLC is a “disregarded entity.” Rental income and expenses go on your personal return on Schedule E. A multi-member LLC is taxed as a partnership, and each member gets a K-1 showing their share. Either way there’s no double taxation.

Florida has no personal income tax, so you pay only federal tax on rental profits and capital gains.

If your real estate income goes beyond passive rent, like flipping houses or managing property for other owners, an S corporation election can cut self-employment taxes. Talk to a tax professional before you elect. And if you plan to sell and buy again, LLCs can do 1031 like-kind exchanges to defer capital gains tax, as long as the same LLC is both the seller and the buyer throughout the exchange.

Do you still need insurance with an LLC?

Yes. The LLC limits what a plaintiff can reach. Insurance is what actually pays the claim. A real estate LLC should carry:

• Property insurance naming the LLC as the insured
• General liability insurance (typically $1 million minimum)
• An umbrella policy on top of the underlying policies
• Landlord or rental dwelling insurance if you rent the property out

Tell your agent about the LLC. If the policy names you personally but the LLC owns the property, a claim can be denied.

One LLC or one per property?

One LLC means lower fees, simpler records and one tax return, but every property in it is exposed if one of them draws a lawsuit. Separate LLCs give you the most separation, and each one costs another $138.75 annual report plus its own paperwork. Florida also allows Series LLCs, which split one LLC into separate liability compartments under a single state filing fee.

A common approach is to start with a single LLC and split into multiple LLCs or a series structure once the portfolio reaches 3-5 properties or meaningful equity. That’s a reasonable default. If one property carries much more risk than the rest, like a short-term rental or an older building, give it its own LLC sooner.

What keeps the protection intact after formation?

File the annual report with the Division of Corporations by May 1 each year. It’s $138.75, there’s a $400 penalty for filing late, and an LLC that keeps missing it gets administratively dissolved. A dissolved LLC protects nothing.

Beyond that, run it like a separate business:

• Deposit all rent into the LLC account and pay all property expenses from it.
• Document every capital contribution and distribution, and never use LLC funds for personal expenses.
• Keep a written record of major decisions: purchases and sales, new members, significant loans or refinancing, and changes to the operating agreement.
• Make sure the LLC’s name is on the deed, insurance policies, property tax records, utility accounts and tenant leases.

Ready to form your Florida real estate LLC?

IncCraft prepares and files your Articles of Organization, provides registered agent service, applies for your EIN and gives you a customized operating agreement template. If you’re buying your next property soon, form the LLC first so it can take title at closing.