As an investor, there are numerous ways in which you can go about purchasing property. However, buying real estate through a Limited Liability Company (LLC), or transferring the ownership ofproperty to an LLC, can be a smart way to protect your personal assets.
This is because an LLC cannot be held responsible for personal debt. Nor can it be held responsible for lawsuits. Because of this, many real estate investors use Limited Liability Companies as a method of asset protection.
By owning property inside of a Limited Liability Company, you will not lose control of your real estate investments. In fact, you will still retain control of your property – especially if you have a single-member LLC.
In addition to protecting your personal assets, owning property in an LLC can also have some additional benefits, as well. For example, an LLC is taxed via a “pass-through” system. Therefore, unlike with a corporation that is taxed twice and is required to file a tax return that is separate from an individual’s, a Limited Liability Company is only taxed once.
How to Form a Limited Liability Company
Limited Liability Companies are easy to form. Today, there are many companies that offer LLC formation online. Typically, the cost of LLC formation will run between $100 and $1,000, depending on the type of LLC that you are forming.
You will also need to provide some basic details regarding your LLC, including its name, address, and contact information, as well as contact details for an individual who will receive the paperwork on the LLC’s behalf. This person is referred to as the registered agent.
Need more information on the benefits of LLCs? Give us a call. We aren’t just a property management company, but we are owned by a licensed real estate broker and CPA.