Chicago Relocation
 

How should I own my luxury investment property?

December 13, 2010

Blog Author Image

I own real estate investment property.  The property is held in an LLC.  So I don’t actually own the property – I own the company that owns the property.  When investing in Chicago luxury real estate  or any real estate - is this the best way to go?  Some experts say yes;  A Limited Liability Company (LLC) is formed to shield the owner from liability, or to provide asset protection. 

Advocates of LLCs claim you own nothing but control everything; based on the concept of forming a company solely with the purpose of owning your property.  The partners take shares of the company and manage the day to day affairs.  At tax time you prepare taxes for the company, and depending on your state and the type of LLC, you will receive a profit or loss which will then be reported on your state and federal income tax.  Those who disagree suggest that simply having enough insurance should insulate the owner from any potential out of pocket expenses associated with liability. 

There are, however, many more considerations.  For an LLC to mortgage a property, there is generally a higher rate than if an individual mortgages the property (and then puts it into an LLC).  The problem isn’t getting a loan as much as it is the rate you’ll be charged.  Even at these historic lows, every penny counts!

DISCLAIMER – Before making a purchase and before deciding what type of ownership in which to hold property, please consult a lawyer and accountant. 

 

RSS feed for comments on this post.
TrackBack URL

Post a comment