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Should I have an investment property under an LLC

Miami, FL |

I'm buying an Appartment for investment. Should I hold it under my name or under an LLC

Attorney Answers 6


  1. Depends on a host of factors, such as managerial contribution, tax, accounting and legal. Need a lot more facts.

    It is important that you understand I am not your attorney and you are not my client. Legal advice requires knowledge of pertinent facts, which cannot adequately be communicated in this manner. I am licensed in Florida and New York only so advice in any other jurisdiction is strictly general advice and should be confirmed with an attorney licensed in that jurisdiction.


  2. I would certainly suggest that you hold this investment in some sort of entity to shield yourself from personal liability. With that said, I would need more information to provide any guidance on the proper choice of entity type. I suggest that you contact an attorney to help you choose the best entity for you, particularly from a tax perspective, and assist in properly organizing the entity. It will be a very small cost in relation to your investment, and definitely worth the peace of mind and possible tax advantages.

    This advice is for INFORMATIONAL PURPOSES only and should not be relied upon as legal advice. No attorney-client relationship shall be formed as a result of the answer above.


  3. If you are going to use a mortgage loan, check with your lender first. If you are buying for cash and you are the sole owner, this is a very simple thing and it would be prudent to hold through an entity.


  4. I recommend LLCs for all rental rental real estate in order to protect one's assets from claims associated with the property,. A lawyer can help you properly form the LLC and decide on the proper tax treatment. Single member LLCs are generally disregarded entities for tax purposes, but you can also elect S corporation status.


  5. The answer is a no-brainer - acquire the apartment in a LLC that is treated as a disregarded entity for tax purposes. You have a layer of protection and no tax downside. Your mortgage lender may require you to personally guarantee the loan, but at least you have the LLC.

    Please hire a good tax and business lawyer in your State to help you BEFORE you sign anything.

    Good luck!

    Ron Cappuccio

    If you do not like this answer or disagree, please look at one of the other answers provided. It is not necessary for you to try prove this answer is "wrong" or something with which you do not agree. This is a free service for you based on limited facts. Nevertheless, many times you need to consult an attorney with the details to get actual advice specific to your concerns. Do not put too many details in your questions or comments because this makes the information public and could hurt you. Government Regulations contained in IRS Circular 230 regulate written communications about Federal tax matters, including e-mail, between us and our clients. This is another attempt by the government to limit your rights and to extend the control of government over individuals and businesses. Nevertheless, such communications are either opinions or other written communications. This is not an opinion. It is other written communication and was not written to be relied upon, by itself, to avoid any tax penalties. In order to receive assurances of protection from tax penalties from a written communication, you should get an opinion letter. If you would like to discuss an opinion letter relating to any matter, please contact me and I will explain what is involved and what it will cost.


  6. For asset protection purposes and to isolate risks, it is always a good idea to put investment properties and other risky assets in a local LLC. This LLC should never hold substantial amounts of cash nor engage in other activities than owning/ managing the property. However, if the amount at stake is big enough, a contintency fee attorney may always attempt to pierce the corporate veil by holding you personally responsible by theories as negligence or gross negligence.

    Therefore , I recommend you to put the sole proprietorship in an entity that is specifically designed for asset protection purposes, such as an asset management limited partnership that is filed in a state with strong charging order rules and a legislative history as AZ.

    The Asset Management Limited partnership that controls the LLC's can hold directly your liquid assets (bank and brokerage accounts). This way, you are protecting your investment properties and isolating the liabilities they may cause, and at the same time, protecting your liquid assets.

    If the total net worth (fair market value of the property, the revenue it generates + personal assets as bank and brokerage accounts, primary residence and other investments) you seek to protect is over the 400/500k benchmark, my advice is to include to your planning a legal tool that provides you an exit strategy that allows you, if necessary, to take your assets out of reach of US courts without compromizing ownership or control.

    An extensive insurance coverage should also make part of your asset protection strategy. Also not that a sound and legitimate asset protection plan should be tax neutral and not compromise ownership or control.

    You need to sit down with an asset protection attorney and an insurance broker with expertise in real estate.

    Douglass Lodmell is the nations #1 Asset Protection attorney and has clients in all 50 states, protecting over $4 Billion in client assets. Answers given by him in this forum do not establish an attorney-client relation. He advises to seek a specialized attorney in the area of your interest for legal representation.

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