Creating a LLC for Real Estate Investing

Creating a limited liability company (LLC) for real estate investing can be a smart move for any investor when

done properly, as it can offer a large amount of protection, including protection of the investors’ personal assets

from legal claims. There are tax advantages and other benefits to forming an LLC for real estate investing.

Setting up an LLC for real estate investing is a relatively straightforward task that involves filing a number of

forms that vary based on the state. Regardless of its relative simplicity, a legal professional should be hired to

ensure that the forms are properly filed.

In real estate investing there are a number of potential legal issues that can jeopardize the personal assets

of investors. Setting up an LLC to administer a real estate investment property may protect an investor from

person liability in the case of a lawsuit, but this protection depends on the nature of the lawsuit. Setting up

a limited liability company is no guarantee that the personal assets of an owner won’t be sought in a lawsuit

as there are legal circumstances that can result in “piercing the corporate veil” however an limited liability

company can still offer a number of protections against personal liability.

Using an LLC as a business structure to administer investment properties can be a good decision, but there

are specific legal procedures that must be followed to keep the LLC in compliance that vary based on the state.

These include filing separate tax returns, keeping company monetary funds completely separate from personal

funds, paying an annual fee to the state, filing an annual statement, setting up a proper operating agreement,

and many other areas that must be addressed.

The LLC should be kept in compliance so that the owner’s assets are protected if the company is sued. An

attorney can be consulted to determine what is needed to keep the LLC in compliance, as the requirements

for compliance vary based on the state, however personal funds should always be kept separate from the

company’s funds, and this must be documented. This keeping a separate bank account as well. When there is

a question as to whether or not an LLC should be utilized as a business structure for real estate investment, an

experienced attorney should be consulted.

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If you are not sure as to what legal document you currently have contact one of our professionals to help you with your estate planning. They will make sure you have all of your grounds covered and have the right legal documents that best suite your wants and needs.