Investing in Real Property through a Company
In the United States, you can either buy a property using your own name or choose to do so via your company.
Using Your Own Name
Purchasing real property in your own name can put your own assets at risk. You could be personally involved in lawsuits and suffer from the misfortunes that you might have to face as a property owner. Your personal assets are not protected and this particular solution is not advised for group investments.
Using Your Company
Purchasing real property using an LLC company is a way to protect your personal assets. Indeed, LLC companies are fiscally transparent and are often used for real estate transactions in the U.S. They are very similar to non-quoted (SNC) or SARL companies in France.
Here are the main benefits of purchasing real property using an LLC company:
- Simplified legal proceedings in case of inheritance transfers.
- Partners are not liable for the company’s debts.
- The company can be managed directly by the partners rather than a board of directors.
We strongly advise that you invest using an LLC company for any purchase over $350,000 or if you already possess several properties.
Setting up a Limited Liability Company
You can set up this type of company with the help of a chartered accountant or a lawyer. You can expect to pay between $750 and $1,500. Make sure that your operating agreement is drafted by a competent lawyer, since this particular aspect determines the rights and obligations of the partners. It is therefore important to hire a trustworthy lawyer who will be able to assist you and provide you with sound advice regarding the management of your company.
Please note that you will have to contact the Revenue Services in order to get an EIN – Employment Identification Number – for your company. You will need this number to pay taxes in the U.S. as well as open a new bank account for your company.
Your yearly accounting budget should be between $800 and $1,200 in order to cover renewal costs and tax return expenses.