Establishing an LLC for Real Estate Investment Reduces Risk and Tax Liability
Why the U.S. Real Estate Market?
My neighbor here in Denver, Colorado bought her house in the 1980’s for $50,000 and now, in 2022, it’s worth over a half million dollars. When I lived in New Orleans, there were countless stories of people buying houses for $30,000 — $60,000 after Hurricane Katrina, and only 10 years later they were selling for over a quarter-million dollars. Many of them never never sold and now have a fully paid-for house that generates passive income through rentals of over $1,500/month and up.
Other real estate markets in southern cities like Atlanta are known to still be affordable but consistently rising. Look at these home values for the past 10 years in Metro Atlanta— a city with a huge variety of cultures and communities, or “something for everybody,” as they say.
I have witnessed these markets first hand but this story is common of the American Real Estate market. You can go out to nearly any American city and find a diamond in the rough.
Start House Hunting! (And You Don’t Have to Stick to One Area)
You can register your company just a few weeks in Wyoming, where there are no state taxes and the quickest registration process in the country. But you don’t have to invest in Wyoming, you never even have to go there! You will then be free to choose a property in almost any state to start your real estate investment business.
One exception is California, which has strict rules on doing business with a “foreign (out of state) LLC”. Most real estate markets in the U.S.A. are much better investments than the California market, which has been experiencing a population decline for the last few years.
Here are Zillow’s top 10 US real estate markets for 2022. On the list you’ll find beaches and mountains, dry air and humid air, hot and cold climates, medium sized cities and big cities. There are even two cities who compete to be the music capital of the United States: Austin, TX and Nashville, TN.
Photo by Matthew Kalapuch on Unsplash
When Looking For a Region To Invest In:
- Follow your interest
- Choose a place where you would like to spend your time
- Choose a place whose local economy is thriving and people are renting and buying
Don’t Invest as an Individual
If you are serious about starting to invest in real estate in any of these hot markets, it is advisable to start an LLC.
As an individual, you can be subject to 30–50% tax on the gains from your real estate investments. This does not apply to an LLC. Your LLC can own that property title and avoid much of that taxation.
Benefits of an LLC
- It’s in the name: Limited Liability. This doesn’t keep you from getting sued. But if you have private assets or wealth they will be insulated from any issues from a lawsuit or a tenant.
- Pass-through taxation. LLC owners are called “members,” members can avoid double taxation from profits on real estate and management. If you are using the LLC to re-invest funds into your property management or new properties, this is a simpler tax filing that will keep far more of the money in the business.
- 3rd party management. LLCs can be easily managed by third parties or partners. This is much more difficult in a corporate structure and much more risky if done as an individual.
- Transfer of ownership. Members can give the properties to family members, or any heir, without the process of deeds or agreements, thus allowing owners to avoid taxes in the exchange process.
- Tax Savings. Depending on what you are doing with your LLC, there are numerous options for tax savings depending on how you file.
To help deal with filing and foreign investments, it’s helpful to have guidance from an attorney or tax professional.
Both of which can be found at MyUSAService.com which is a company built by foreign investors who have come together with U.S. citizens to bring this opportunity to as many people as possible.
Say “hey” and get to know us at https://www.facebook.com/myusaservice
How to Get Started?
Here are the steps:
- Establish a partnership agreement
- Create a company name and obtain an EIN number
- Choose the best state for your situation, register your LLC
- Open a Bank account
- Choose your first property
- Prepare a purchase contract
- Purchase requisite insurance on the title and on your property
This will be just the beginning of your U.S. real estate investment journey. But many people will never get this far, even if they have the capital!
MyUSA Service is here to make sure you are able to establish your LLC the right way and have all of the support necessary to start your U.S. based real estate investment business.
Though you could find a lawyer, an accountant, a registered agent, a US address, and open a U.S. bank account separately, it is easier, quicker, and more affordable to go with a company that has all of these positions on staff already. This option is the perfect balance of autonomy for the customer while providing the necessary support to navigate the U.S. government’s requirements.
We offer free consultations on establishing your LLC in the United States as well as general investment consultation. Do not hesitate — schedule a call with the MyUSA team today!
Photo by Clemens van Lay on Unsplash