You may have noticed people tell you “Always use LLCs for real estate”, and someone else may say “Always hold your real estate in a Trust”. As a genuine estate investor, it could be both confusing and frustrating to get such definitive, contradictory advice yet. As a total result, a lot of investors are left to wonder – just which is correct? Well, the answer again is: IT DEPENDS!
Unfortunately, in our complex tax code, there is no “easy way” to provide an answer. Also, there is absolutely no “one size matches all” strategy that works for all those real estate traders. An analogy I often make is: Offering taxes advice without first understanding everything about the taxpayer is the same as a doctor prescribing medication without first doing a diagnosis. In both the financial and medical field, this is known as malpractice. Every taxpayer differs and unique. As such, the BEST legal entity(s) to hold title to your real estate investments depends on your personal, business, investing, and overall tax situations.
The answers to all of the questions above will assist your consultant in determining the perfect legal entity structure for your investment. It is true, an LLC can be a great entity for those buying real estate. But there are times when holding your investments in an LLC will lead to significantly higher taxes vs. Corporation or a Trust.
Step One: Spend some time and think about your answers to the 5 planning questions above. SECOND STEP: Look for your competent real estate and asset safety attorney to help you develop the best entity structure for your real estate holdings from a LEGAL perspective based on your answers above.
Step Three: Concurrent with Step Two, seek out your tax advisor to help you develop a strategy to determine the best entity framework for your real property holdings from a TAX perspective based on your answers above. Step Four: Develop the optimum entity structure for your proposed real estate investments using the guidance of both your legal and tax advisors. Get them to interact as a team to develop the best strategy and framework for your situation! Most investors spend resources and time on research, due diligence, rehab, leasing, and property management to guarantee the profitability of their investments. Make sure you take that extra step to look for the best legal entity to carry your real estate and further boost your come back with significant taxes savings.
PAA – a news story by Alerian about PAA’s buyer day. I own PAGP and there was 1 comment in the story that I thought was representative of midstream MLPs and will probably be worth focusing on. Many MLPs have said recently that they have got deceived and religious beliefs run after after each opportunity that comes along.
They will focus on building up their balance linens and raising ROE. Right. That will last before next deal comes along. So, PAA got said that after 2019 they expected cap ex to drop a lot as they completed their current projects. Now, with the Red Oak task, the drop in cover ex-lover has been pressed out a calendar year or 2. Happens all the time, and I’m rethinking my PAGP investment, which hasn’t done so well since I purchased it anyway. SMLP – June 8 article by Long Player, Very Bullish ranking, 125 responses.
- Has large capital, knowledge and resources for research
- Don’t speculate unless you makes it a full-time job
- 1 – slope of AE function
- What type of places searching for
- 20% IGLO ishare global government bonds
- Your business rocks customers in the real world
LP has a subscription service to market, and articles frequently on SA about MLPs. If this post is typical of his service, don’t trouble. I don’t see that he composed any previous articles about SMLP so that it appears like he’s bottom angling, which is something a lot of us do. His basic premise is that SMLP’s price got slashed because they slashed the distribution, however the basic business continues to be doing OK, so it’s undervalued just now. SMLP has at least 2 major issues that LP either ignores or makes light of.
The one he ignores is that SMLP depends on minimum volume commitment payments for a number of its income and cashflow. A discussion of those contracts, including expiration dates, would have been good. 300-MM payments coming due next calendar year for the nutty drop down deal it did with its sponsor a few years ago. LP simply says that if they finance the whole amount, SMLP’s leverage would be “fairly conventional”.