Reduces Liability, Increases Privacy and Less Costly

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Land Trust vs LLC Comparison

Benefits of Holding Property in a Real Estate Land Trust

Do you own residential or commercial investment property? Or maybe you’re planning an acquisition or sale. If so, there are tremendous benefits for you when using a real estate trust for title. Many investors are quitting LLCs for title. Along with time and money savings, a real estate trust gives you anonymous ownership in public records. It is the safest way of holding ownership.

A quick comparison (Trusts vs LLC) of the benefits illustrate just how powerful and effective trusts are for bank account and peace of mind!

 

Reduced Personal Liability

Trust Benefit Mark

Real Estate Trust: Yes! This is an enormous benefit. Any property held in a real estate trust is legally isolated from your other assets. Therefore, you are generally safe for liabilities attached to the property. You and your other personal assets are shielded, as liability is contained within the real estate land trust as the legal owner.

Personal Title

You can be held personally liable for any and all risk asso­ciated with the property. All of your other personal assets are exposed.

LLC

Personal liability is limited by the LLC organization. However, the LLC must remain in compliance with state law, secretary of state filings and fees. Any omissions can invalidate your LLC statutory protections.

Isolates Properties

Trust Benefit Mark

Real Estate Trust: Yes! With title in different trusts, properties are isolated from you, and from each other.

Personal Title

The property is connected to you personally

LLC - No, sorry.

Multiple properties owned by one LLC are all connected. Otherwise a separate LLC is created and maintained for each property.

Privacy of Ownership

Trust Benefit Mark

Real Estate Trust: Yes! There is no public record that connects your personal name to the property.

Personal Title

Your name and address are part of the public record whether or not you live in that property.

LLC

You are indirectly linked to the property because if in compliance with the Secretary of State, members full name and address is online.

Privacy of Sales Price

Trust Benefit Mark

Real Estate Trust: Yes! If the purchase is executed within a trust, the purchase price can kept private.

Personal Title

When you personally take title to real property, what you paid is found on the grant deed

LLC

When you take title to real property in an LLC, the purchase price is obtained from the grant deed.

Tax Return Privacy

Trust Benefit Mark

Real Estate Trust: Yes! Only net rental income appears on your personal return, not the property itself.

Personal Title

All income and expense plus the property itself is listed on your personal tax return.

LLC

Unless LLC files a partnership or corporation tax return.

Retain Tax Base

Trust Benefit Mark

Real Estate Trust: Yes! The seller’s tax base may be retained by the trust.

Personal Title

When you take title in your own name, the tax assesor will re­assess the value of the property.

LLC

Special rules apply to LLC transactions and you may not be able to retain the owner’s tax base.

Exempt from Franchise Tax

Trust Benefit Mark

Real Estate Trust: Yes! You are exempt from paying franchise tax in California

Personal Title

No, but you are personally exposed.

LLC -

It must pay $800 franchise tax each year.

Split Gains & Losses

Trust Benefit Mark

Real Estate Trust: Yes! You allocate them as determined by ownership percentage.

Personal Title

All income and expenses are generally alocated to you personally.

LLC

It depends upon the operating agreement

Property Safe from You

Trust Benefit Mark

Real Estate Trust: Yes! The property is safely and legally isolated from your personal liens and judgments.

Personal Title

Your property is directly connected and at risk from your personal liens and judgments. Creditors may attach and seize your equity.

LLC

Individual LLC membership interests are at risk from seizure or levy by tax authorities or creditors.

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