Why Consider an LLC for Real Estate?
When you buy US real estate as a foreign investor, one of the first questions I get asked is: "Should I buy it in my name or through an LLC?" The answer depends on your goals, but for most investors, an LLC provides meaningful benefits.
An LLC (Limited Liability Company) is a US business entity that can own property. It separates your personal assets from the property, provides privacy benefits, and can simplify estate planning. However, it also adds complexity and cost.
Benefits of LLC Ownership
- Personal assets protected from property lawsuits
- Privacy - your name may not appear in public records
- Easier transfer of ownership (sell LLC instead of property)
- Simplified estate planning for foreign investors
- Professional appearance for investment properties
Drawbacks of LLC Ownership
- Formation and maintenance costs ($500-2,000/year)
- Additional tax filings required
- Some lenders charge higher rates for LLC-owned properties
- Annual reporting requirements
- May not qualify for certain homeowner exemptions
Which State for Your Real Estate LLC?
You can form an LLC in any US state, but three options dominate for real estate investors. Each has distinct advantages depending on your situation.
Wyoming LLC
Best for privacy and asset protection. No state income tax and strong charging order protection.
- + Maximum privacy - no public ownership disclosure
- + No state income tax
- + Low annual fees ($60/year)
- + Strong asset protection laws
- ! Must register in property state as "foreign LLC"
Delaware LLC
Best for multiple investors or complex structures. Business-friendly courts and flexible laws.
- + Most flexible LLC statute
- + Court of Chancery expertise
- + Series LLC available
- + Well-understood by lenders
- ! Higher annual fees ($300/year)
Local State LLC
Formed in the state where the property is located. Simplest option for single properties.
- + No foreign registration needed
- + Simplest structure
- + Local agents and attorneys understand it
- + Lowest total cost for single property
- ! Privacy depends on state laws
My Recommendation
For most foreign investors buying a single property, I recommend forming an LLC in the state where the property is located. For multiple properties or when privacy is paramount, a Wyoming holding LLC that owns local LLCs is often the best structure.
Multi-Property Structure
If you plan to own multiple properties, I typically recommend a holding company structure. This provides liability isolation between properties while maximizing privacy.
Miami Condo
Austin Rental
LA Investment
In this structure, a lawsuit against one property cannot reach the others. The Wyoming LLC provides an additional layer of privacy since Wyoming does not require public disclosure of LLC members.
Need Help Forming Your LLC?
I provide comprehensive LLC formation services including operating agreement drafting, EIN application, and registered agent setup.
View Entity Formation Services →Tax Implications of LLC Ownership
Single-Member LLC (Disregarded Entity)
If you are the only member of the LLC, the IRS treats it as a "disregarded entity" by default. This means the LLC does not file its own tax return - the income flows through to you personally. This is usually the simplest option for foreign investors.
Multi-Member LLC (Partnership)
If you co-own the property with others through an LLC, the entity is taxed as a partnership. This requires filing Form 1065 annually and issuing K-1s to each member showing their share of income or loss.
FIRPTA Considerations
LLC ownership does not change your FIRPTA obligations when selling. The 15% withholding still applies to foreign sellers. However, proper structuring can help with treaty benefits and tax planning. See my financing guide for more details.
Corporate Election Warning
Some advisors suggest electing corporate tax treatment for your LLC. For foreign investors in real estate, this is rarely beneficial and can create significant complications. Do not make this election without consulting a cross-border tax professional.
How I Help You Form a Real Estate LLC
What is Included in My Formation Service
- State filing - Articles of Organization filed with appropriate state
- Operating Agreement - Custom drafted to protect your interests and satisfy lender requirements
- EIN Application - Federal tax ID number for the LLC
- Registered Agent - First year of registered agent service included
- Banking Resolution - Documentation to open LLC bank account
- Compliance Calendar - Annual filing reminders and requirements
Timeline
Standard formation takes 3-5 business days in most states. Expedited processing is available in most jurisdictions for an additional fee. EIN processing for foreign-owned LLCs takes an additional 4-6 weeks as it requires paper filing.
Generate Your Operating Agreement
Use my operating agreement generator to create a customized document for your real estate LLC.
Open Operating Agreement Generator →Common Questions About LLC Real Estate Ownership
Can I get a mortgage in the LLC's name?
Yes, but it is more complex than personal financing. Most lenders will require a personal guarantee and may charge slightly higher rates. Some investors buy in their personal name and transfer to an LLC after closing, though this can trigger due-on-sale clauses. I can advise on the best approach for your situation.
Do I need to be in the US to form an LLC?
No. You can form a US LLC from anywhere in the world. I handle all filings remotely, and you sign documents electronically. You do not need a US address, Social Security Number, or visa.
What about the Corporate Transparency Act?
As of 2024, LLCs must report their beneficial owners to FinCEN. This is a confidential filing - not public record - but it means true anonymity is no longer possible from a federal perspective. Wyoming still provides privacy from public searches and lawsuits.
Can I use one LLC for multiple properties?
You can, but I generally do not recommend it. If something goes wrong with one property (lawsuit, liability), it can put all properties at risk. Separate LLCs for each property provides better protection.
Ready to Structure Your Real Estate Investment?
Schedule a consultation with me. I will review your investment goals and recommend the optimal LLC structure for your US real estate portfolio.
Sergei Tokmakov, Attorney — California Bar #279869