Forming a Limited Liability Company for Real Estate Investment
A Limited Liability Company (LLC) is a flexible business form that maintains some of the attributes of both a corporation and a partnership.
LLCs provide limited liability for the owners of the business, similar to a corporation. The LLC offers pass through taxation, like a partnership.
Additionally, a LLC is a creature of statute, like a corporation, but it is an agreement based business, like a partnership.
The LLC's operating agreement may be tailored to fit a great number of structures that suite the needs of family businesses, passive investments, silent partnerships, joint ventures, or businesses that intend to operate with a more formal structure like a corporation.
The dual benefits of limited liability and pass through taxation, along with the ability to tailor the business structure to meet the needs of the owners and investors, make LLCS an excellent option for real estate investment.
Pros of Real Property in an LLC:
- Liability protection
- Pass through taxation
- Taxed as partnership
- Estate planning for continuity and probate avoidance
Asset Protection Generally
- Creating a LLC DOES NOT limit your business liability
- Creating a LLC DOES protect personal assets and limited individual liability
- Follows formalities to avoid liability
Rental Property Liability Considerations
- Liability to tenants
- Residential v. commercial property
- Defects on the property
- Attractive nuisance
- Slip and fall accidents
- Other premises liability
- Licensees v. invitees
The Take Away: Please contact me to discuss practical legal considerations and steps to ensure that you maximize the benefits of the LLC business form in real estate.
I offer free consultations by telephone at 307.200.1914 or by videoconference if you wish.