Definition
LLC ownership holds property in a Limited Liability Company, a business entity providing liability protection while allowing pass-through taxation. LLC ownership is common in real estate investment to protect personal assets.
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LLC ownership offers investors liability protection by separating personal assets from property liability. Property held in an LLC can be managed more flexibly than individual ownership, and multiple members can own fractional interests. LLCs require annual filings and maintenance but provide strong protection against lawsuits, creditors, and claims. Some lenders or insurance providers may require specific approval for LLC ownership.
Pro Tip
Consult a tax advisor before using LLC ownership, as it can create self-employment tax implications.
Example
A real estate investor holds rental properties in an LLC to protect personal assets from tenant lawsuits and property liabilities.