Results 1 to 4 of 4
  1. #1

    Default Using a Corporation or an LLC and Trust to Hold Investment Properties

    My question involves real estate located in the State of: California

    Hello

    We are looking at purchasing income rental property.

    We have an existing corporation (INC). I am trying to avoid forming an LLC.

    Questions Legal wise:
    1 Can we title the new income rental property into our existing INC instead of forming a new LLC and still have the veil against our Trust/personal assets from NON criminal law suites?
    2 Whether we title in INC , LLC or our Trust, I assume there is never a veil when it comes to any potential criminal liability?
    3 Would I need a "veil" at all , if we get a 15 Million insurance liability policy on the rental income property and a 15M personal umbrella, at that point can we just title the rental income property into our existing Trust? keeping in mind that our personal home is already titled under our Trust, so that will make 2 properties under our Trust if we add the new income property..hence the 15M

    Questions tax wise: ( I know its not a tax forum, sorry)
    Whether we title the income rental property into an INC or LLC or our Trust, I assume we would we still receive the same tax deductions available to such properties, correct?

    Thank you very much

  2. #2
    Join Date
    Jul 2018
    Posts
    1,168

    Default Re: Inc or LLC and a Trust

    Quote Quoting BettySueThomas
    View Post
    Can we title the new income rental property into our existing INC instead of forming a new LLC and still have the veil against our Trust/personal assets from NON criminal law suites?
    One would need a lot more information to opine intelligently about this. Among other things, you didn't tell us why your existing corporation exists.


    Quote Quoting BettySueThomas
    View Post
    Whether we title in INC , LLC or our Trust, I assume there is never a veil when it comes to any potential criminal liability?
    If I understand this question correctly, the answer is yes.


    Quote Quoting BettySueThomas
    View Post
    Would I need a "veil" at all , if we get a 15 Million insurance liability policy on the rental income property and a 15M personal umbrella, at that point can we just title the rental income property into our existing Trust?
    You can title the property however you like. Carrying tens of millions of dollars in insurance coverage will obviously provide protection against virtually any sort of claim.


    Quote Quoting BettySueThomas
    View Post
    Whether we title the income rental property into an INC or LLC or our Trust, I assume we would we still receive the same tax deductions available to such properties, correct?
    When you ask whether "we [would] still receive the same tax deductions," what are you talking about? If you title a piece of property in the name of a corporation, then you will not be entitled to anything in terms of taxes, unless you set it up in a way that the corporate form is disregarded for tax purposes.

    Given the substantial numbers you're talking about, you would be extremely foolish not to seek and pay for professional advice. Relying on things that anonymous strangers on the internet tell you is a great way to lose lots of money.

  3. #3
    Join Date
    Oct 2014
    Posts
    7,147

    Default Re: Inc or LLC and a Trust

    Quote Quoting BettySueThomas
    View Post
    My question involves real estate located in the State of: California

    Questions tax wise: ( I know its not a tax forum, sorry)
    Whether we title the income rental property into an INC or LLC or our Trust, I assume we would we still receive the same tax deductions available to such properties, correct?

    Thank you very much
    The deductions for the expenses of the rental, including depreciation, are the same, but who gets the deductions differs. If the owner is a regular corporation (known as a C corporation in federal tax law) then it is the corporation that gets the deductions. If the owner is a S-corporation, then the business is taxed much like a partnership and the income and deductions flow through to the owners.

    If the owner is a trust, then it depends on the details of the trust. If the trust is a grantor trust (which includes a revocable trust) then the trust is ignored and the income and expenses of the trust are included directly on the return of the trust grantor. If the trust is not a grantor trust then the trust pays the tax except to the extent it made distributions to the beneficiaries; the beneficiaries include the trust income on their return to the extent of the distributions they received.

    If the property is owned directly by an individual then of course the individual includes the income and deductions on his/her tax return.

    A LLC owned by just one person is ignored under federal tax law and the property is treated as though the LLC owner owns the property directly. A LLC with two or more members is treated by default as a partnership, with the income and deductions flowing through to the partners. A LLC may, however, elect to be classified as either a C corporation or (if it meets the requirements) as a S corporation.

    But while the deductions for the expenses are the same, other tax rules are different among these different tax classifications and that will impact ultimately what tax you pay on the rental. I suggest you consult a tax attorney for advice on the arrangement that may best save tax for you. Bear in mind that tax savings should not be the only consideration in choosing how you structure this.

  4. #4

    Default Re: Inc or LLC and a Trust

    Thank you

    1. Sponsored Links
       

Similar Threads

  1. Disability Benefits: Can You Own Investment Properties While on SSDI
    By stubbs11b21@gmail.com in forum Social Security Law
    Replies: 1
    Last Post: 05-15-2018, 05:44 AM
  2. Foreclosure: Foreclosures of Investment Properties and Bankruptcy
    By congole in forum Buying, Selling and Conveying Real Estate
    Replies: 1
    Last Post: 01-30-2010, 02:14 PM
  3. Foreclosure: 2 Investment Properties, One to Foreclosure in California
    By duckmuck00 in forum Buying, Selling and Conveying Real Estate
    Replies: 2
    Last Post: 11-02-2009, 10:45 AM
  4. Foreclosure: Investment Properties Entering Foreclosure or Short Sale
    By czeilenga in forum Buying, Selling and Conveying Real Estate
    Replies: 2
    Last Post: 05-26-2009, 05:29 PM
  5. Not Allowed to Own More Than 5 Investment Properties
    By glclark in forum Buying, Selling and Conveying Real Estate
    Replies: 4
    Last Post: 12-06-2008, 08:17 PM
 
 
Sponsored Links

Legal Help, Information and Resources