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Should I buy a property under an LLC?

  • Buying Properties Under an LLC
  • If you are buying properties in the USA as an investment, it is a good idea to buy the property under a company. There are many different reasons why this is your best option. Below we will discuss the most important of those reasons.
  • Separation of Liability and Assets
  • Avoid Firpta
  • Anonymity
  • Possibility of Lowering Your Taxes

Create an LLCWhy Delaware?Tax Returns in USA

  • Separation of Liability
  • Real Estate usually means you are investing a high amount of capital. As in all investments there is risk. The risk in real estate will most likely come from your tenants or natural causes (i.e. storms, lightning, flooding). By only having one property under each company, you are reducing your liability and severing it from your other real estate investments in other companies. This is the number one most important rule in real estate. Buy properties each under different LLC’s. If you choose to buy more than one property under an LLC, let us know and we will give you other solutions that can achieve the same results mentioned above.
  • Anonymity
  • This is not always important to the investor. But it definitely plays an important role in investing in the USA. If you or your partners need to maintain some level of anonymity, then a company is your best option. We recommend an LLC with more than one member. Delaware offers an even higher level of anonymity when desired.
  • Delaware vs. Florida

Create an LLCWhy Delaware?Tax Returns in USA

  • FIRPTA is a federal withholding of 15% of the sales price of your property. FIRPTA only applies when the owner of the property is a non-resident. Even if the investor lost money on the sale, the 15% retention will still apply. This retention is not a tax. If no tax is due from the sale of the property, the IRS will refund some or all of this retention. FIRPTA can be avoided by purchasing under an LLC (with more than one member) or a Corporation.
  • Avoid FIRPTA
  • Use a Multi-Member LLC
  • Or use a CORP
  • If you are using a company to purchase your real estate investments, there is a good chance your taxes will be lower. This could be because your company has more expenses that are allowed by IRS standards, or because there are multiple owners of the LLC. Since the LLC is a pass-through entity, each member will file a personal tax return with their share of the income or loss. Since the USA Tax Code works on a tax-bracket system, dividing the income across all members may actually put an individual member at a lower tax bracket. This will consequently reduce your tax liability.
  • Each member files a tax return with their share
  • More allowable expenses
  • Lower Tax Bracket

Create an LLCWhy Delaware?Tax Returns in USA