How to Hold Title to Your Commercial Real Estate
By Christopher J. Schiavone If you own commercial real estate or are contemplating purchasing commercial real estate sometime in the future, you may want to consider establishing a limited liability company to own the property. There are several advantages to utilizing an LLC as a “holding” company for real estate. If you currently own property individually or as a part of the entity that operates your business, you or your company could be subjected to various types of liability, such as personal injury, property damage, contractor disputes, and even environmental issues. Establishing an LLC for the sole purpose of owning commercial property not only protects your business assets, but also limits the exposure of personal liability. An LLC can also provide certain cost savings and tax advantages. For example, the income of a single member LLC will “pass through” directly to the owner so that the LLC itself is not required to file a separate income tax return. This enables you to streamline the reporting of income and expenses associated with the property while simultaneously avoiding double taxation on the income generated from the property, as would be the case if a C corporation owned the property. These advantages become even more apparent if you own or are interested in owning multiple properties. In particular, you may want to set up a “parent” LLC to act as the owner of multiple “subsidiary” LLC’s. Each separate subsidiary can then be utilized to own a single commercial property. Structuring the ownership of the properties in this manner would afford further liability protection of the assets or equity of each property. These are just a few of the advantages of utilizing an LLC for the ownership of commercial real estate. Keep in mind that forming an LLC to own commercial property is not a substitute for the proper liability insurance, but rather an added layer of protection for your business and personal assets. The change of ownership from an individual to an LLC, however, may create a small increase in insurance premiums depending on a variety of circumstances. Therefore, careful consideration must be given when determining how to own commercial real estate. For more information on using an LLC to own your commercial real estate or for any other real estate issues, please contact Christopher J. Schiavone at cschiavone@fandr law.com, Leonard D. Schiavone at lschiavone@fandrlaw.com, or Carl D. Rafoth at crafoth@fandrlaw.com.
|
