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Rental property LLCs in Illinois

Yes, you can hold an Illinois rental in an LLC. You file Articles of Organization with the Secretary of State for $150, then an annual report ($75) before the first day of your anniversary month every year. Illinois also lets one LLC hold several properties as separate series, at a higher filing fee. Rental rules are city by city: Evanston, Aurora, Peoria and Rockford register long-term rentals, and in Chicago a short-term rental in a home or a two-to-four-unit building generally has to be the host's primary residence. Forming the LLC doesn't move your deed, a recorded deed can carry state, county and city transfer tax, and the LLC doesn't stop your lender's due-on-sale clause.

Last checked 2026-10-24. General information, not legal or tax advice.

Local rental rules come first

Chicago, long-term rentals. The Residential Landlord and Tenant Ordinance (RLTO) covers most Chicago rentals except units in owner-occupied buildings with six units or less, most hotel and rooming-house units, dormitories, shelters, employee quarters and owner-occupied co-ops. A summary of the ordinance must be attached to each written lease and each lease renewal, and given to the tenant under an oral agreement (Dept. of Housing RLTO page). The Department of Housing's RLTO page lists no registration requirement. The city's Protecting Renters Ordinance, introduced June 29, 2026, would require annual registration of all non-owner-occupied rental units, and the Department of Housing's page says it "is pending Council approval" (Dept. of Housing; Mayor's press release). I can't tell from here whether Council has acted since, so check the City Clerk's records.

Chicago, short-term rentals. Every shared housing unit (31 days or fewer) needs an approved city registration number before it is listed; the city lists a $250 annual registration payment, and a host with more than one registration also needs a Shared Housing Unit Operator License. The unit must be a legal dwelling unit with six or fewer sleeping rooms, outside a Restricted Residential Zone and off the Prohibited Buildings List. In a single-family home or a 2-4 unit building the unit must be the host's primary residence, with one active rental at most. In a building of five or more units it needn't be, up to one-quarter of the units or six, whichever is less (BACP eligibility criteria). BACP adds that a denied applicant may, if the denial letter offers it, request a Commissioner's Adjustment to seek an exception. The City Clerk defines primary residence as living in the unit at least 245 days in the calendar year, and not claiming the Cook County homeowner exemption creates a rebuttable presumption that it isn't one. Chicago taxes these stays at 4.5% (Hotel Accommodation Tax) plus a 6% Shared Housing Surcharge (BACP). A precinct becomes a Restricted Residential Zone by petition signed by at least 25% of its registered voters; the zone lasts four years unless renewed, and hosts already operating there may continue only until their registration expires or ownership or tenancy changes hands (City Clerk FAQ; Code §§ 4-17-020, -040, -070). Whether an LLC can hold a registration, or whether a deed to your own LLC counts as ownership changing hands, I couldn't tell: the portal account is opened in a person's legal name, and BACP's registration guide returned an access-denied error. Ask BACP before you deed.

Evanston. Ordinance 141-O-18 requires annual registration of long-term rentals: single-unit homes, condominiums, multi-unit buildings and accessory dwelling units. The owner-occupied unit is exempt, but the other units in the building must register. A new registration costs $200 plus $12 per unit, renewal $12 per unit, routine inspections $50 per unit, and inspections run on a 5-, 3- or 1-year cycle depending on the last result (city Rental Registration page). A short-term rental (under 30 consecutive days) needs a separate city license: $150 to apply, $250 a year, a property-maintenance inspection first, and the license number goes in the listing (city Short-Term Rental License page).

Aurora, Peoria and Rockford. Aurora requires every non-owner-occupied property to register, with fees starting at $90 per property and varying by unit count, annual rental inspections, a criminal background check on each new tenant 18 or older, and a licensing year that renews each August 31 (city FAQ). Peoria requires annual registration of non-owner-occupied residential property by February 28 ($75 for a single-family home; $75 for the first unit plus $20 for each additional unit in a multi-family building; a $150 late fee). An owner who lives outside Peoria, Tazewell and Woodford counties must appoint a property manager with an office in one of them, who must be a licensed Illinois real estate broker if the manager leases or lists the property; Peoria also licenses short-term rentals at $75 per unit (city Residential Property Registration page). Rockford requires any residential rental in the city to register in its Rental / Short-Term Rental Registry at no cost, with fines of $50 to $750 per day for noncompliance (city FAQ).

Suburban Cook County and elsewhere. Cook County's Residential Tenant Landlord Ordinance (June 1, 2021) covers almost all rental units in suburban Cook County, with exemptions such as owner-occupied buildings of six units or less (Cook County). Rental rules are otherwise local. Ask your city and county before the first lease.

What the LLC protects, and what it doesn't

The Illinois LLC Act says: "A member or manager is not personally liable for a debt, obligation, or liability of the company solely by reason of being or acting as a member or manager." (805 ILCS 180/10-10(a)). Failing to observe the usual company formalities isn't a ground for personal liability (§ 10-10(c)).

  • Guarantees still bind you. A personal guarantee you sign for a lender is your own promise.
  • Your own acts are yours. The Act says a member or manager may be liable under other law "for his, her, or its own wrongful acts or omissions," and courts keep equitable remedies "such as piercing the limited liability company veil" (§ 10-10(a-5)).
  • It isn't insurance. The LLC still needs coverage that pays claims and defense costs.

One LLC, or one per property?

Separate LLCs keep one property's judgment away from the others. Illinois also allows series LLCs, and the fee schedule favors them as the property count grows. The Act lets an operating agreement set up designated series with separate rights, powers or duties for specified property (§ 37-40(a)). A series' debts stay on that series' assets only if separate records are kept, its assets are held and accounted for separately, the operating agreement says so, the articles carry notice of the limit on liability, and a certificate of designation is filed for each series (§ 37-40(b)). A series with limited liability "may, in its own name, contract, hold title to assets, grant security interests, sue and be sued" (§ 37-40(b)); the LLC's registered agent serves every series and each series is in good standing while the LLC is (§ 37-40(e), (f)). Skip any of those steps and the wall may not hold, so have an Illinois attorney set it up.

  • Formation. Articles for an LLC able to establish a series cost $400 instead of $150, and each series needs a $50 certificate of designation (Secretary of State; § 50-10(b)(1), (17)).
  • Annual report. $75 plus $50 for each series whose certificate is in effect, instead of $75 per separate LLC (§ 50-10(b)(11)).
  • Three or five properties. Three separate LLCs cost $450 to form and $225 a year in annual reports; one series LLC with three series costs $550 and $225 a year. At five properties it is $750 and $375 for separate LLCs against $650 and $325 for one series LLC. Ask your lender, title company and insurer whether they will deal with a series before you rely on one.

More: Should you have a separate LLC for each rental property?. Other states: All rental property LLC guides · Indiana · Missouri.

Already have an out-of-state LLC?

An LLC formed elsewhere must be admitted by the Secretary of State before it transacts business in Illinois (§ 45-5). The application for admission costs $150 ($400 for an LLC with series) and needs a certificate from your home state's filing office that the LLC exists, plus an Illinois registered agent, an Illinois resident individual or another person authorized to transact business here (§§ 45-5(a)(3), 1-35(a); Secretary of State forms page). Illinois lists "owning, without more, real or personal property" among the activities that are not transacting business, but its list is non-exclusive and leasing isn't on it (§ 45-47). I can't tell from official sources whether renting out a property counts, so ask an Illinois attorney. An unadmitted LLC can't sue in an Illinois court, can still defend, and makes the Secretary of State its agent for service; it owes the fees and reports it would have paid, and if it isn't admitted within 60 days of starting business, a $2,000 penalty plus $100 for each month (§ 45-45). Its members aren't liable for company debts just because it skipped admission (§ 45-45(e)). An admitted foreign LLC also files the $75 annual report (§ 50-1).

What it costs the state

  • Articles of Organization: $150 (Secretary of State LLC-5.5; 805 ILCS 180/50-10(b)(1))
  • Annual report: $75, every year (805 ILCS 180/50-10(b)(11); Form LLC-50.1)
  • 24-hour service for the articles (optional): $250 total online (Secretary of State)
  • Name reservation (optional): $25 (§ 50-10(b)(4))
  • LLC able to establish a series: articles $400, certificate of designation $50 per series, annual report $75 plus $50 per series
  • Foreign LLC application for admission: $150 ($400 with series)
  • Change of registered agent or office: $25
  • Reinstatement after administrative dissolution: $200
  • Online filings add a payment-processor fee; the Secretary of State doesn't state the amount
  • EIN: free from the IRS

Compare services: LLC services compared.

Forming the LLC, in order

  1. Pick a name containing "limited liability company," "L.L.C." or "LLC," and none of "Corporation," "Corp.," "Incorporated," "Inc.," "Ltd.," "Co.," "Limited Partnership" or "L.P." (§ 1-10(a)). The Secretary of State requires a name that is unique; reserve it first if you want to hold it.
  2. Name a registered agent: an Illinois resident individual or another person authorized to transact business in Illinois, at an Illinois registered office with a street or road address (§ 1-35(a); Secretary of State). A P.O. box alone is unacceptable.
  3. File Articles of Organization ($150). They give the name and principal place of business, the purpose, the registered agent and office, the names and business addresses of all managers and any member with a manager's authority, each organizer, and confirm the LLC has at least one member (§ 5-5(a)). The LLC exists when the Secretary of State files them (§ 5-5(b)).
  4. Write an operating agreement.
  5. Get an EIN and open the LLC's bank account.
  6. Calendar the annual report: your anniversary month is the month your articles were filed (§ 1-5).
  7. Register or license each rental with the city (above).

Forming the LLC doesn't move your deed

Putting your rental in the LLC takes a new deed, recorded in the county where the property sits (765 ILCS 5/28). Until it is filed for record it is "void as to all such creditors and subsequent purchasers, without notice" (765 ILCS 5/30). In Cook County the Clerk's Recording Division records deeds, and a deed costs $107, made up of a $55 county recording fee, $23 GIS fee, $10 storage fee, $18 state Rental Housing Support fee and a $1 filer fee (Clerk fee schedule effective April 1, 2024). Other counties set their own fees.

  • State transfer tax: 50¢ per $500 of value. "Value" is the full actual consideration, including any lien the buyer assumes. If the deed says the property is transferred subject to a mortgage, the outstanding mortgage isn't counted (35 ILCS 200/31-10, 31-5).
  • County and city add their own. A county may impose 25¢ per $500 (55 ILCS 5/5-1031), and Cook County's Clerk lists .25 per $500 beside the state's .50. Home rule municipalities may add taxes (65 ILCS 5/8-3-19). Chicago's is $5.25 per $500: $3.75 usually paid by the buyer and $1.50 by the seller. The city page lists a flat rate; I found no tiered rates on it. Cook County's Clerk says to check the municipality where the property sits.
  • Exemptions. Deeds where the actual consideration is less than $100 are exempt from state tax (§ 31-45(e)), and county tax follows the same exemptions. Chicago's list exempts transfers for less than $500 but says no transfer is exempt unless the declaration states the supporting facts. Whether a no-cash deed to your own LLC, with a mortgage still on the property, qualifies is a question for your attorney and the recorder.
  • Declaration or exemption language. A transfer declaration (Form PTAX-203), signed by at least one seller and one buyer or their agents, is due when the deed is presented for recording or within 3 business days after the transfer, whichever is earlier (§ 31-25). For exemption (e) the Department of Revenue requires no PTAX-203, only a notation of the exemption on the deed. Cook County asks for exempt-transfer language citing the paragraph of 35 ILCS 200/31-45, and a grantor/grantee affidavit on exempt transfers. A willfully false PTAX-203 is a Class B misdemeanor for a first offense.
  • Selling the LLC later is taxed too. The tax also applies to transferring a controlling interest, more than 50%, in a real estate entity. An entity is presumed to be one if real property is more than 75% of its assets (§§ 31-10, 31-5).
  • If you live in the home, check the homestead exemption first. Homestead property is residential property "occupied by its owner or owners as his or their principal dwelling place" (35 ILCS 200/15-175(f)). Ask your county assessor whether a deed to your LLC ends it.

Have an Illinois attorney prepare the deed. After it records, update leases, rent payment instructions, deposits and insurance, and re-apply for any city rental or short-term license.

Check the mortgage before you transfer

Federal law lets a lender enforce a due-on-sale clause, and a transfer to an LLC isn't one of the exceptions for 1–4 unit homes (12 U.S.C. § 1701j-3(d)). Fannie Mae allows a transfer to an LLC the borrower controls for loans it acquired on or after June 1, 2016 (Fannie Mae Servicing Guide D1-4.1-02). Ask your servicer in writing.

Insurance and taxes

Tell your insurer before title moves. For federal income tax, a single-member LLC is disregarded unless it elects corporate treatment (IRS). Illinois follows: a disregarded LLC "has no Illinois income tax filing requirements," and its income goes on the owner's IL-1040 (Dept. of Revenue); the individual rate is 4.95 percent. A multi-member LLC taxed as a partnership files Form IL-1065, and partnerships pay a 1.5 percent replacement tax on net income (Dept. of Revenue); ask a CPA whether an exemption applies.

  • Short-term rentals owe hotel tax. The Hotel Operators' Occupation Tax applies to sleeping-room rentals of fewer than 30 consecutive days, including houses, apartments and condominiums rented by their owners. Register through MyTax Illinois; the rate is in the Department's Tax Rate Database. Publication 106 says the Department collects the state tax and the Chicago-area hotel taxes, and local hotel taxes elsewhere go to the local authority.

Keeping each LLC in good standing

  • File the annual report ($75) before the first day of your anniversary month; the Act lets you deliver it in the 60 days before that day (§ 50-1(b)). It lists the registered agent and office, the principal place of business and the managers (§ 50-1(a)).
  • Miss it and the Secretary of State declares the LLC delinquent and not in good standing. Unless corrected before the first day of the second month after the anniversary month, the penalty is $100 plus $100 for each year of delinquency after the first, and the office won't file other documents for the LLC (§ 50-15). It can also dissolve the LLC administratively (§ 35-25). Reinstatement costs $200, and an administratively dissolved LLC's name is unavailable to others for three years (§ 50-10(b)(12); Secretary of State).
  • Keep a registered agent on record continuously; if yours resigns you have 60 days to name a new one (§ 1-35(d)).
  • Renew city permits on their own clocks: Evanston annually, Aurora each August 31, Peoria February 28 (registration) and January 31 (short-term rental license), Chicago short-term registrations annually. File hotel tax returns as required.

Before you file or transfer a property

  • Attorney: the deed, the exemption notation, series vs. separate LLCs
  • Servicer: is the transfer allowed?
  • Insurance agent: named insured, coverage
  • County assessor: homestead exemption
  • CPA: income tax, replacement tax and hotel tax
  • City: rental registration or short-term rental registration in the LLC's name
  • Calendar: the annual report window; city renewals

Form it with Corpus

Corpus prepares and files your Articles of Organization and includes the first year of registered-agent service. The Illinois page shows the current price. Corpus isn't a law firm: the deed, the loan, taxes and city permits are separate steps.

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Sources

Last checked 2026-10-24. Corpus is not a law firm and does not provide legal or tax advice.