Before purchasing property in Florida, it is important to consider whether the purchase would be best as an individual or by using a business entity (such as an LLC). Purchasing property under a business entity can offer advantages such as shielding personal assets from liability associated with the property, tax benefits, and additional ownership privacy. Some of the many benefits of purchasing under an entity name are provided below so you can make an informed decision of what approach is best for you.
Asset and Liability Protection:
Purchasing property under an entity name rather than as an individual creates a legal shield for your personal assets if the property faces legal issues or creditor claims. But, if the property is purchased as an individual, you will be personally liable for any losses or debts related to the property. Moreover, if there are multiple investors of the entity, any property liability will be distributed rather than applied to an individual purchaser.
Privacy:
Additional privacy is provided when purchasing property as an entity because the entity’s name will appear on the deed, which is public information. This adds an additional layer of privacy that is not provided when purchasing as an individual because the personal name would be on public record.
Tax Implications:
Purchase through an entity can create certain tax benefits. This could be done through deducting business expenses related to the property or through the home sale exemption which avoids capital gains taxes on the sale. Moreover, income and losses from an investment property are generally not subject to tax withholding.
Financing:
Purchase under an entity allows for multiple investors to join in raising capital for the purchase. Although, securing financing, for example through a bank, may be more difficult and require a personal guarantee or a larger down payment.
Business Expenses:
Certain business entities allow for the deduction of business expenses, such as property taxes, insurance, and management fees from taxable income.
Ease of Transfer:
An entity allows for easier transfer of ownership shares compared to transferring the property itself.
Long-Term Management:
Entities can simplify property management, especially if there are multiple parties involved in the purchase of the property.
Purchasing property in Florida under an entity name offers a range of legal protections and financial benefits. However, it is imperative to consider the requirements for forming and maintaining a U.S. entity in Florida, ensuring your business is correctly established and fully compliant with local and state laws.
If you would like to learn more about the legal implications of purchasing Florida property under a business entity, or to discuss with a legal professional what option is best suited for your specific needs, do not hesitate to contact one of our experienced business attorneys at EPGD Business Law. With offices in Miami, FL, we are ready to assist you. Call us at (786) 837-6787 or email us to schedule a consultation.
