Should I have an investment property under an LLC

Asked 6 months ago - Miami, FL

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

Attorney answers (6)

  1. Barry Evan Haimo

    Contributor Level 12

    5

    Lawyers agree

    Answered . 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... more
  2. Mark Robert Mohler

    Contributor Level 11

    5

    Lawyers agree

    Answered . 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.

  3. Gregory Herman-Giddens

    Contributor Level 14

    4

    Lawyers agree

    Answered . 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.

  4. Samuel Watson Eastman

    Pro

    Contributor Level 14

    5

    Lawyers agree

    Answered . 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... more
  5. Douglass S Lodmell

    Pro

    Contributor Level 13

    2

    Lawyers agree

    Answered . 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... more
  6. Ronald J Cappuccio

    Pro

    Contributor Level 15

    3

    Lawyers agree

    Answered . 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... more

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