You may have heard people let you know “Always utilize 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, yet contradictory advice. As a result, a lot of investors are left to wonder – which one is right just? Well, the answer again is: IT DEPENDS!
Unfortunately, inside our complex taxes code, there is no “easy way” to offer an answer. Also, there is absolutely no “one size matches all” strategy that works for all those real estate investors. An analogy I often make is: Offering tax advice without first understanding everything about the taxpayer is the same as a doctor prescribing medication without first performing a diagnosis. In both the medical and financial field, this is known as malpractice. Every taxpayer is exclusive and different. As such, the BEST legal entity(s) to carry the title to your real estate investments will depend on your individual, business, investing, and overall tax situations.
The answers to all the questions above will help your advisor in determining the perfect legal entity framework for your investment. It really 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 time and think about your answers to the 5 planning questions above. SECOND STEP: Seek out your skilled real estate and asset protection lawyer to help you develop the best entity framework for your real estate holdings from a LEGAL perspective based on your answers above.
Step Three: Concurrent with SECOND STEP, seek out your tax advisor to help you develop a strategy to determine the best entity structure for your real estate holdings from a TAX perspective based on your answers above. FOURTH STEP: Develop the ideal entity framework for your proposed real property investments using the guidance of both your legal and tax advisors. Get them to interact as a team to build up the best strategy and framework for your position! Most investors spend time and resources on research, due diligence, rehab, leasing, and property management to guarantee the profitability of their investments. Be sure you take that extra step to look for the best legal entity to carry your real estate and further increase your come back with significant taxes savings.
PAA – an information story by Alerian about PAA’s buyer day. I own PAGP and there is 1 comment in the story plot, which I thought was representative of midstream MLPs and is worth focusing on. Many MLPs have said recently that they have got learned and religious beliefs run after every opportunity that comes along.
They will focus on building up their balance bed sheets and raising ROE. Right. That endures until the next offer comes along. So, PAA acquired said that after 2019 they expected cap ex to drop a lot as they completed their current projects. Now, with the Red Oak task, a yr or 2 the drop in cap former mate has been forced out. 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 comments.
- Has large capital, knowledge and resources for research
- Don’t speculate if you don’t makes it a full-time job
- 1 – slope of AE function
- What sort of places searching for
- 20% IGLO ishare global authorities bonds
- Your business rocks customers in the real world
LP has a membership service to sell, and articles frequently on SA about MLPs. If this post is typical of his service, don’t trouble. I don’t see that he published any previous articles about SMLP so 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 is still doing OK, so it’s undervalued just now. SMLP has at least 2 major problems that LP either ignores or makes light of.
The one he ignores is that SMLP relies on minimum volume dedication payments for a number of its income and cash flow. A discussion of those agreements, including expiration schedules, could have been good. 300-MM payments arriving due next 12 months for the nutty drop down deal it did using its sponsor a few years ago. LP simply says that if they finance the entire amount, SMLP’s leverage would be “fairly conservative”.