Should I be Buying LLC with real estate or simply real estate
Anyone here know the advantages/disadvantages og simply buying an llc which owns commercial real estate(offices) vs buying the offices directly into my own LLc. I guess depreciation comes into play..what about taxes?
[{"id": "isqf4or", "text": "Don\u2019t buy the LLC. It comes with liabilities.", "replies": [{"id": "isr1l9f", "text": "But only a limited amount", "replies": [], "depth": 2}], "depth": 1}, {"id": "isqgkpr", "text": "This is definitely consult an attorney territory rather than ask Reddit territory.\n\nAs far as income taxes go, that depends upon how the LLC was treated for federal income tax purposes. If you're the only buyer, most likely there's no difference from that perspective.\n\nGenerally, with local/state transfer taxes, there are rules to prevent people from getting around those taxes by selling an entity that owns the property rather than the property itself.\n\nIf the prior owner goofed up under the LLC, the LLC is still responsible. There are *some* liabilities that might transfer with land (environmental, permits, etc) but the list is smaller.\n\nIf the LLC hired contractors and has warranties, then purchasing the LLC would include the warranties whereas otherwise the warranties likely wouldn't transfer.\n\nThere could be other contracts or licenses to use the real estate that wouldn't run with the land but to which the LLC would still be bound.", "replies": [], "depth": 1}, {"id": "isqs4u4", "text": "My buddy does this and only buys old multi family properties owned by llc because it doesn\u2019t trigger a tax reassessment", "replies": [{"id": "isrn9xl", "text": "Where doesn\u2019t it trigger", "replies": [], "depth": 2}, {"id": "isstwqd", "text": "He most likely means property tax assessment. Since there is no change in the owner of the property (the LLC) if he buys the LLC he thinks this doesn't trigger a review of the value. He must be in poorly run counties as most do periodic reviews of all properties especially when market prices are escalating.", "replies": [], "depth": 2}], "depth": 1}, {"id": "isr3xgf", "text": "Asset purchase", "replies": [], "depth": 1}, {"id": "isr93so", "text": "Asset purchase. Don\u2019t want the business (and it\u2019s skeletons), want the hard assets.", "replies": [], "depth": 1}, {"id": "issy8bf", "text": "Buying an LLC is a very advanced strategy to avoid major tax increases. You need to speak to an attorney first. To be safe, I would avoid doing this. It is better to open a new LLC that has never been operational and purchase the property in that entity. In most states, the statute of limitations for most civil suits is 4-5 years. If you purchased a LLC, you are taking on the  risk of the last 4-5 years of their business; not to mention that there might be other debts.", "replies": [], "depth": 1}, {"id": "ist1v9d", "text": "Advantages: Possibly avoid a property tax increase in a jurisdiction that only reassesses properties when they are transfered, might have a better chance with credit for an established business if they handled their debt properly, or could take over a loan with good interest rates if there is no language in the loan docs preventing it.\nDisadvantages: Property already has accumulated depreciation, can't do cost segregation, you're legally responsible for everything the previous LLC did, etc.", "replies": [], "depth": 1}, {"id": "isu7jcm", "text": "It\u2019s uncommon but it happens. There\u2019s a tax strategy behind it. \n\nI personally have not done it at this point. But there would be additional due diligence and indemnifications. \n\nIm going to venture to say indemnifications are key, no matter how much DD you do on a corp things can come out of the woodwork randomly years later.", "replies": [], "depth": 1}]