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Many of our clients ask about the advantages of holding title to an investment property in an LLC. In order to shed some light on this issue, we asked real estate attorney Matthew Ellis of Downy Brand Attorneys, LLP to list the most common reasons to create an LLC when purchasing real property. His comments are below:
 
1. Limitation of Liability- Holding assets in a LLC shelters personal assets from claims arising from the assets held by the LLC.
2. No Double Taxation- LLCs do not pay income tax; LLCs are treated like partnerships for tax purposes.
 
3. Flexible Structure- LLCs allow for the creation of various class levels and income allocations.
4. Required by Most Commercial Property Lenders- Most commercial property lenders only want to lend to single-purpose LLCs.
 
5. Non-Recognition Treatment- LLCs may be capitalized with 1031 exchange proceeds without triggering a capital gains tax event
Posted by Adam Andrus on July 12th, 2011 2:20 PMPost a Comment (0)

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