Protecting Your Assets in the U.S.A.
What is the Best Entity for Real Estate Investors?
The best entity for both U.S. and foreign real estate investors is the limited liability company (LLC) or the limited partnership (LP) in some cases. Both offer the benefits of asset protection and flow through taxation. LLCs and LPs are also affordable to set up and maintain on an ongoing basis.
We encourage you to work with your local tax advisor for the best strategy according to your nation’s tax system. For example, Canadian investors find it best to have the final holding entity be a limited partnership. This is because U.S. limited partnerships match up better with Canadian LPs for Canadian tax purposes. So for Canadians holding one Texas and one Florida property (as an example) we structure U.S. investments as follows:
The U.S. limited partnership structure requires two entities – one to be the limited partnership and another to be the corporate or LLC general partner. But for Canadians, this structure can save significantly on taxes back home. Likewise, while Australians use LLCs and LPs frequently, when investing with their Superannuation Funds (retirement monies) there are some wrinkles to be ironed out with the U.S. parent entity. Feel free to call our office on such matters.
Can Foreign Individuals Own U.S. LLCs, LPs and Corporations?
Yes, while foreign individuals cannot be owners of S corporations, they most certainly can be owners of an LLC, an LP or a C corporation. Most investors from outside the United States utilize the LLC (or the LP) for their real estate investments.
Where Should We form Our LLC?
You can file in any U.S. state. In many cases LLCs are formed in the state where the real estate is held. These LLCs are in turn owned by a parent LLC. We suggest that our clients form a parent company in the state of Wyoming or Nevada for their superior asset protection benefits and very minimal state fees. We maintain complete offices in both Wyoming and Nevada.
Do We Need to Have a Separate LLC for Each Property?
Superior asset protection is achieved by placing one property in one LLC. That way, if you were sued over the real estate by a tenant or vendor, they can only reach the equity in the one property held by the LLC. By contrast, if you had ten properties in one LLC and a tenant sued over one property they could reach the equity in all ten properties owned within the LLC. A key strategy for asset protection is to segregate assets into separate LLCs.
Why do investors choose Wyoming over Nevada?
Wyoming (and Nevada) law provides that the exclusive creditor remedy is the charging order. This means that a creditor cannot force a sale of your real estate. Instead, they must wait for distributions, which may never be made. So both states are protective. However, Wyoming is more affordable than Nevada. The annual fees for Wyoming are only $52.00 per year, versus $350.00 per year for Nevada. As well, Wyoming does not list LLC owner names on the internet, thus offering more privacy than Nevada.
Do I need to form a separate corporation to act as the manager for the LLC to keep the money in the U.S.?
While not required, it is a good strategy to have a separate management corporation which can manage and hold assets in the U.S. We can set up a C corporation to manage your LLCs.
Do You Obtain Our ITIN?
We are not able to obtain individual Tax Identification Numbers, or ITINs for foreign individuals.
How do I Obtain an ITIN?
There is a form which needs to be filed with the IRS. The IRS also has a service through Accepted Agents who can assist with the process. In many cases, when you file your first LLC tax return the IRS will then assign you an ITIN.
How Long Does It Take to Form the LLC?
Allow at least a month for the whole process to be completed. Wyoming processing time is about 2 weeks – allow extra time for safety.
Is It Better to Be Manager Managed or Member Managed?
We prefer that you have your LLC manager managed to keep ownership information out of the public record. A member (owner) managed LLC in most states has to identify the LLC owner. As well, if privacy is important we can provide a nominee officer or manager for $650.00 per year so that your name is kept private.
Do We Need to Have a U.S. Address?
You need to have registered agent in each state where an LLC is formed. We can provide this service for you.
What Does Sutton Law Center Charge to Set Up an LLC?
We charge a flat fee of $695.00 (plus filing fees, which varies from state to state) for the complete LLC package. We file the articles, prepare the operating agreement, minutes and membership certificates, and provide you with a complete package for safely investing in the USA.
Sutton Law Center, P.C., can assist you with all of your Asset Protection needs. To schedule an appointment with a knowledgeable Asset Protection lawyer, call us at one of the following:
U.S. Toll Free: 800-700-1430
U.S. Local: 775-824-0300 International: + 775-824-0300
Hablamos Español: 775-284-7165