If you’d prefer to make a real estate purchase as a limited liability property (LLC) rather than as an individual, this is completely possible. Purchasing property under your LLC comes with some unique benefits, as well as some pitfalls that you’ll need to stay aware of.
Owners of an LLC have the option to purchase property under their own name or their LLC, depending on personal preference.
Why Should I Buy Property With an LLC?
There are a few benefits to purchasing real estate under your LLC. One of the most notable benefits is privacy. When a home is purchased under an LLC, any documentation will feature the name of the business entity, rather than the name of the owner or a specific individual. If you prioritize your individual privacy, you may want to keep your own name (as well as personal information) off disclosures and public documents associated with the property.
The next benefit relates directly to the “limited liability” component of an LLC. When you’re the owner of an LLC, you generally aren’t held personally responsible for the liabilities or debts of your company – although exceptions to this rule do exist.
As an example, maybe there ends up being an accident on your property. If you made the purchase under your own name, it’s more likely that you’ll be held responsible for the incident. In the event of a lawsuit, having the property registered under your LLC business can afford extra protection.
What Are the Downsides of Buying Real Estate as an LLC?
It can be more difficult to be approved for a mortgage if you’re an LLC. For the most part, residential lenders hesitate when they’re approached by LLCs. This is largely due to the “limited liability” part of the structure, which can be concerning to lenders.
Banks understand that you won’t be held personally responsible for the debts of your LLC, so you may need to volunteer personal assets as well, in order to back any debts.
The Bottom Line: Purchasing Property as an LLC
Although it’s completely possible to buy a property through your LLC business, you’ll need to weigh the risks and benefits, as well. Even if you’re the owner of an LLC, you can still opt to buy real estate under your own name, rather than your business.
Looking for more guidance on buying property, whether you own an LLC or another business structure? Reach out to us today.
Brought to you in part by TAYLOR-MADE HOME INSPECTIONS LLC
Charles Stallions, CBR, CRS, CSR, is a licensed broker/ owner representing buyers and sellers in Pensacola, Pace, and Gulf Breeze Florida. Text, Call or Email, "answer" to Charles 850-476-4494 for the answer to the two most important questions you need to ask YOUR next real estate agent or loan officer.
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