Through the years, the Authentic Real Estate Team has helped countless foreign buyers purchase property here in Orlando. One of the biggest decisions our foreign clients face when making their purchase is whether to take titleship in their own name or under a company name (usually an LLC). Each of these options presents its own advantages and disadvantages with which, in light of such a high-stakes transaction, it’s important to familiarize yourself. Here’s a breakdown of these two routes to titleship:
TITLESHIP UNDER YOUR NAME VS A COMPANY – Holding as an LLC
- When a foreign investor eventually decides to sell their property, they are beholden to FIRPTA withholdings, whereby the IRS withholds a percentage (usually 15%) of the earnings until capital gains taxes are paid. As an LLC, however, as long as you’ve filed tax returns, you can withhold FIRPTA yourself.
- Taking a title as an LLC, if the LLC has more than one member, protects the investor against estate tax.
- An LLC with multiple members also benefits from tax exemptions of up to $4,000 per member.
- Titleship under an LLC, as long as the LLC is formed and managed as an Independent Entity, also protects the owner’s worldwide personal assets against lawsuit.
- LLC’s aren’t cheap. Forming an LLC typically costs around $700.
- There’s also an annual renewal fee of about $250.
- Maintaining an LLC is a big responsibility. Keeping the company in good standing requires adherence to legal formalities such as designating a registered agent and maintaining sufficient company records.
TITLESHIP UNDER YOUR NAME VS A COMPANY – Holding in Your Own Name
- Taking titleship in your personal name is simply easier than as an LLC, which requires many legal formalities associated with maintaining a corporation.
- There are no extra costs associated with signing your own name to a title.
- If filed correctly, personal titleship can protect the titleholder against estate tax.
- In the unfortunate case of a lawsuit, personal titleship will not protect your worldwide personal assets.
- When you decide to sell the property, FIRPTA will withhold 15% of your proceeds until you pay capital gains taxes.
TITLESHIP UNDER YOUR NAME VS A COMPANY – If you’re a foreigner with dreams of owning a piece of Orlando’s thriving property investment market, the Authentic Real Estate Team can help turn those dreams into reality. But making your dreams real often involves making some big real-world decisions. What kind of titleship is right for your investment is one of them. Fortunately, we have the experience and insight to help you make a well-educated, confident decision, so you get the most out of your Orlando real estate investment.
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