LLCs and Real Estate Investors

Limited Liability Corporations (LLCS) are a favorite business entity for real estate investors. An LLC is a hybrid between a partnership and corporation. An LLC has partnership features because it has a lot of flexibility similar to a partnership. The downside to a partnership is no liability protection. On the other hand, an LLC has limited liability protection similar to a Corporation. Unlike a Corporation, an LLC does not have a double taxation feature. Thus, the LLC is a pass through entity where the owner(s) pay taxes passed upon their individual tax return. An individual fills out a 1040 tax return and prepares a schedule, which details their profit and loss from the LLC.

LLCs are favorite of real estate investors. Combining an LLC with a private residence trust is a powerful way for asset protection. It does not violate a due on sales clause, which mortgage agreements all have. Second, liens and judgments do not attach to a private residence trust. The legal title of the property is the name of a Trust, which the Client manages. The beneficiary title is a Asset Protection LLC, which provides the maximum creditor protection. Unlike a typical LLC, an Asset Protection LLC cannot be foreclosed like a regular LLC. This is important because a creditor typically has no way of accessing the real estate property.

For a free telephone consultation, please call Sean Robertson at 312-498-6080 or RobertsonLawGroup@gmail.com.