A good week friends, a question that costs quite a lot, and it is certainly interesting here quite a bit ...
Great week friends ,
A question that comes up quite a bit, and certainly interesting here are quite a few followers…
Most foreign investors invest in companies automatically, and the recommendation is sweeping, so I am impressed, is that over 2-3 properties are required to start a company
(LLC)
It seems that the Americans are also setting up companies for every type of activity, and this raises several questions:
1. Do you as Israelis investing in real estate in the US consider it necessary to start a company? Despite the costs involved, the duplicate reports that need to be filed etc etc?
2. Is good insurance, which includes personal injury to the property, not comprehensive and provides the protection?
3. Does not conduct as a society complicate and add complexity? Suppose you want to change something between partners, sales, and in general, conduct with the tax authorities there and here?
4. To what extent is the legal protection and separation between the private owner and the property in the case of a tenant's claim when the owner is not an American?
5. Are there any statistics on the number of claims leasing to US property owners? And to what extent do the insurances respond to such claims?
Thank you in advance for answering
The original responses to the post can be read at the bottom of the current post page on the site or in the link to a post on Facebook and of course you are invited to join the discussion
I would love to hear about reasons or situations in which it is actually better to register a property as a private owner and not as a company…
1. - no. In my opinion it mostly depends on the type of deal and risks, and whether you are alone or with partners.
2. - It is very possible that it is. Depends on the insurance
3. - Complicated just as much as if I were making a deal with partners and had to make one change or another. The complexity mostly comes from an affiliate aspect and not whether incorporated one way or another.
4. Each case, but in the case of owners from another country to the tenant / prosecutor even more difficult to reach the owners, not impossible but more complex.
5. not known to me
Just add that I have a chapter in the podcast exactly on this subject.
Not every business decision you make is associated with minimizing risks. Of course, this is the aspiration, but there are situations, as Sheryl Sitman noted, which are true in terms of the economic strategy in which you are being put to put the assets in your name. Of course, this is personal preference. We all, including the bank, want to earn, it's not a zero-sum game. I do not think there's any right or wrong here.
There is no clear answer because it depends on your personal situation. There are good reasons here and there. But asks a question. For an Israeli - without citizenship or SOCIAL SECURITY NUMBER A management company must do a 30% tax clearance - or am I missing something?
In short, do not think twice about society, and that's the question that has been asked dozens of times. Do not take risks
You are going to buy a property for hundreds of thousands of dollars. Starting a company costs a few hundred dollars. It is recommended that you protect your property in any way possible. You put your life savings there. Definitely for US residents in residential properties it will limit the funding but have you thought what is the reason for this? The bank wants to sue you personally if you do not pay! The bank does not want you to start a company. This limits his ability to sue. The bank is not your friend. The bank wants to make sure he gets his money because it's a company that's really not good for him - what is ALC - Company Ltd. - a limited liability company. For those who do not know, this is one of the greatest and most important inventions of the last millennium. Read the history books. Individuals were afraid to start a business for fear of losing all their money, so what did they do to encourage people to take risks - created a limited liability company. Limited to the amount of your investment so you can not be sued for your personal money and your personal home that you have saved all your life. Especially for Americans it is critical - because it is easy to confiscate your American home because you live here. Chasing after you to Israel is harder, but still unpleasant to accept a lawsuit that would result in a situation where you would have to sell other properties in the United States in your name. The sweeping recommendation is a separate ALC company for each property! This is the optimal situation. Of course this is not always feasible. Commercial assets by the way owe a company but the terms of financing are already business and embody the risk in amortization and interest.
Hi Uzi Galili?
LLC
It's really not mandatory.
LLC
This is a separate legal entity.
Similar to the Company Ltd. in Israel (not in the context of taxation)
American citizens are not advised in the first properties to put the houses on the LLC
As this reduces leverage.
For foreign residents, in my opinion, it is more critical for them to open a company.
They usually need it both for defense and for leverage.
In order to protect from claims you can also purchase comprehensive insurance. (Umbrella coverage)
That there is more than one asset.
Let's start with the key question: whether you hold American citizenship or not… If your answer is “no” then your only way to purchase a property in an economically-legal-correct way would be only in the name of LLC, now from personal experience: anyway for both citizen and investor A foreigner is advised to register each property separately in the name of another company.
Not a lawyer, but from some experience with lawsuits and lawsuits in the US. Lawyers look at the defendant's potential, what assets, money, and status he has, and according to that determine how much it is possible to inflate the statement of claim in the US many times, even if the claim is justified, or they would prefer to reach a compromise and pay just to avoid dragging out the process. which can be very expensive. Those who do decide to go to trial can sometimes find themselves right or wrong, but will not receive a refund for the lawyer's fees that have gone up and the court fees, so that it is usually not worthwhile to go to trial even if you are right
The LLC is intended to limit the amount of the claim to the assets under the LLC and to prevent attorneys from personally pursuing the property owners
The LLC was created in recent years to protect small businesses.
Today, large claims (lawyers) are making sure to bring everyone to court.
In my humble opinion LLC is the better option of the two, and the cost is quite marginal for real estate investors