Hi guys!
This is more of a legal/accounting issue to investing in the States.
Does anyone understand the benifits and pitfalls of each holding entity in the US? At present, im of the opinion that an "LLC" (limited liability company) is the best way to hold a property as a foriegner. Does anyone care to share their opinion or knowledge on this area? Or outline why an LLC may be benificial as opposed to holding property in ones own name, or an S or C comp?
BMHUsing an LLC is a great way to hold US property. It provides another layer of protection from holding property in your own name. I would also recommend getting landlords insurance with a large amount of liability protection.
Unless you are a US citizen you can't form an S or C Corporation.
I just set up a C-corp and I’m not a US citizen. Took 1 day to set up the company and 20 minutes to set up the bank account.
But I think in most circumstances a C-corp is not good for investing in real estate. Only good for avoiding estate taxes. Lower taxes if you invest via an LLC generally.
An LLC based out of Delaware affords the best protection laws for the investor, and they are recognised and upheld in all the states in the US. Delaware based LLCs have much lower caps on the amounts one can be sued for etc. and do incur a slightly higher setup fee and yearly admin costs, but this is something to consider if buying several properties etc. You then can apply to the IRS to be taxed as a S Corp for tax purposes only. This is especially helpful with 1 member LLC's, who can be taxed once through the LLC and then a second time as an individual. By electing to be treated as an S corp for tax purposes only you create the "pass through" benefits of corporations in the USA. There are no laws against a US formed LLC with a sole member who is an Australian citizen, from electing and being granted the ability to be taxed as an S corp.
And you are correct internext in saying that a C Corp is not really a suitable entity for real estate investment.
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