Investing in real estate is a lucrative asset class regardless of your ownership structure, but like any investment, it carries risk. While you can’t eliminate all risks, there are ways to strategically lessen them. One way to reduce certain real estate-related risks, particularly those related to liability, is to own your properties under an entity, rather than as an individual investor. 

Purchasing real estate in Florida under an entity name, such as a limited liability company (LLC), corporation or trust, offers many legal protections and advantages including personal asset protection, privacy and tax advantages, among others. But what if you already own real estate in Florida? Can you transition that existing property into an entity ownership structure?

Yes, with the right approach. 

Transitioning property ownership isn’t as simple as flipping a switch, but it can be done seamlessly if you partner with the right professionals. Here’s what you need to know to move your Florida property into an entity ownership.

What to Know When Transitioning Property Ownership

If you already own property under your personal name, keep these considerations in mind before transferring ownership to an entity:

  • Weigh the advantages and disadvantages of transferring ownership – Transferring property to an entity may come with a few challenges, so it’s critical to evaluate them before taking any action. For example, an ownership transfer may trigger tax consequences like capital gains tax or a reassessment of property taxes. Mortgage lenders may also cause a stink about ownership transfers because of due-on-sale clauses. Lastly, there are the costs of the transfer itself, including taxes and fees related to filing and professional services. Keep these considerations in mind before proceeding with an ownership transfer.
  • Consider the entity type – If you decide to proceed and haven’t yet formed an entity in Florida, you should consider which entity type will be best for your needs. Common options include LLCs, corporations and trusts. A real estate attorney can guide you through each option and help you assess the right structure for your goals.
  • Register the entity – There are several steps to establishing a U.S. entity. In doing so, you’ll need to ensure compliance with state requirements and draft an operating and partnership agreement, among other formation documents.
  • Transfer ownership of the property – Once your entity is established, you’ll need to transfer ownership of the property to the entity. This involves several steps and should be done in close partnership with a trusted real estate attorney and title company. They will help you create a new deed to transfer ownership from your personal name to the entity. Common deeds for this purpose include quitclaim deeds and warranty deeds. Your title company will submit the new deed to the local county recorder’s office and facilitate payment of any transfer taxes. 
Contact Us at Sirulnik Law and ADS Title Services, Inc. 

Transitioning your Florida property into entity ownership is a proactive step to safeguard your investments and reduce personal risk, but it involves legal, financial and tax considerations. Be sure to work with experienced professionals before taking steps to transfer property ownership in Florida. Our team at the Law Offices of Alex D. Sirulnik, P.A. and ADS Title Company, Inc. will guide you through the process and ensure a smooth ownership transfer. Contact us today with your questions.