J. Cappuccio, J.D., LL.M. (Tax)
Counsellor at Law
1800 Chapel Avenue West, Suite 128
Cherry Hill, New Jersey 08002 US
(856) 665-2121 Fax (856) 665-9005
Should Real Estate be Acquired using a Limited Liability Company?
Benefits to an
LLC for Real Estate Acquisitions:
Asset protection – if
people slip and fall on property, they sue the LLC, not the individual owners.
If person dies in
another state, the LLC avoids an ancillary probate in the State where the property is located.
3) Owners can gift a few
shares of the LLC to their children without redoing the deed each
4) Discounted gifts can be made to children, thereby leveraging the gifts.
5) The owners can slowly give
value of the asset away and maintain control.
6) Owners may not need as
much liability insurance because LLC provides limited liability. Still need
some to avoid doctrine known as piercing the corporate veil.
Negative aspects to an LLC in Real Estate Acquisitions:
Transferring property to an LLC
will void the title insurance
If the property has a
mortgage it will trigger a large real estate transfer fee.
In theory, if there was
a mortgage the lender could call the loan. This could happen if interest rates significantly increase.
When adding family
members to LLC, it will trigger the need for a 1065 tax return – i.e. more
There is an annual fee
for an LLC.