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Thinking about it some more, can't I enter depreciation on a Schedule C?

You sure can. You can also take depreciation on a Schedule E, which might be more appropriate for real estate rental. The main difference is whether you're running what amounts to a hotel. A hotel goes on Schedule C. Rental of real estate is Schedule E.

What is the advantage of an LLC over just a Schedule C?

From a federal tax standpoint, there is little to no difference. If you are the sole owner of the LLC, there is literally none - as the LLC is disregarded for tax purposes (unless you elect to treat it like a corporation, which is usually a bad idea for real estate).

Your state taxation might be different. For example, a California LLC requires a separate return for the $800 minimum tax on LLCs plus the potential additional tax based on gross receipts.

CA has the highest annual fee on LLCs. Most other states are smaller (as in under $100) or don't have one at all.

Taxes are neutral or higher with an LLC. The trade off is the potential for liability protection. LLCs may provide some liability protection. For how well that might work, consult a lawyer. This non-lawyer things the liability protection is oversold by those who want to form LLCs. You can also get liability protection via insurance - and you'll want liability insurance even if you also have an LLC.

The liability protection from an LLC is best thought of as disaster insurance. If things get too bad, you can lose the property and keep your other assets safe. But if things are only mildly annoying (say a minor slip and fall injury) the liability insurance will cover that without you having to pay $10k or $20k or having to lose your entire investment in the property.

--Peter
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