The primary advantage of using LLC’s and corporations for real estate investing is asset protection. Both the limited liability company and an incorporated company can hold the real estate safe from your personal liabilities. Additionally, you have the choice of an S or C Corporation, with different tax treatment for each of these and the LLC. The right business structure for your particular situation should be decided after consultation with a real estate lawyer.
Do you have additional questions regarding LLC’s and corporations? Our real estate attorneys are here to assist you throughout the process and answer any questions you may have. Contact a real estate lawyer near you today.
There are quite a few significant benefits to using a company for holding real estate investments, as detailed below:
Talk to your attorney about setting up a land trust and transferring your real estate holdings into it with the beneficiary as your company. This is the perfect setup that avoids all liabilities including IRS liens and court judgments. It will avoid the transfer tax applicable when you hand over the estate to your beneficiaries, and it allows your assets to grow without being subject to capital gains tax.
By using a C Corporation, you can further reduce the tax burden to the corporate rate. This is particularly important for investors who buy and sell, as opposed to holding real estate as an investment. Buying and selling as an individual will get you tagged with the IRS "dealer status" and the attendant loss of significant taxation benefits.
Do you or does someone you know need legal information regarding LLC’s and corporations? Our real estate lawyers are here to help. Contact a real estate attorney in your area today for more information.
Did you know?
The best business structure for rentals is an LLC.
The LLC offers pass-through taxation, so losses and depreciation are passed on to your personal tax returns. Corporations get taxed every time you take the money out for a new investment, but LLC taxes are limited to the actual income from each transaction.