Before closing on real estate as a foreign investor in Florida, there’s one major decision you (and your investment partners, if applicable) need to make and that’s whether to buy the property as an individual investor or through an entity such as an LLC, corporation or trust. Purchasing an investment property under an entity name is a common strategy among real estate investors in part because of the legal protections it can offer owners. Below we’ll discuss several of them so you can decide which ownership structure is right for you.

Legal Considerations When Investing Under an Entity

One of the primary advantages of investing in Florida real estate under an entity name is that it offers a level of liability protection you don’t get as an individual investor. If there is a lawsuit or creditor claim made against the property owners, the business entity will be liable but your personal assets should be shielded. This helps limit risk in the event of a lawsuit or other financial dispute. Here are some other considerations:

  • Privacy – Property ownership is public record in Florida, but when you acquire real estate through an LLC, the entity’s name will be on the deed, not your own.
  • Tax considerations – Entity ownership offers tax advantages not available to individual investors. For example, income and losses from an investment property are generally not subject to tax withholding. To ensure your entity is structured in a way that maximizes tax benefits, consult with your tax professional and real estate law attorney.
  • Investment partners – Purchasing Florida real estate under an entity structure also allows the entity to add members or investors to the LLC so that members can jointly contribute capital and share in the income or losses, per the entity’s operating agreement. It also may allow for easier transfer of ownership.

Purchasing property in Florida under an entity name offers a range of legal protections and financial benefits, but it’s also imperative to consider the requirements that come with forming and maintaining a U.S. entity in Florida. You’ll want to ensure your business is formed correctly and in compliance with local and state laws. Give us a call at the Law Offices of Alex D. Sirulnik, P.A. | ADS Title Services, Inc. to learn more about registering a U.S. entity in Florida and to understand the implications of investing in real estate under an entity name.