Owning Real Estate: LLC vs. Trust?

Owning Real Estate: LLC vs. Trust?

As with most other financial and tax planning strategies, the choice between holding rental property in an LLC or a trust depends on an investor’s unique situations, needs, and goals. 

An LLC for rental property may be a good way to protect other business and personal assets from creditor claims and to raise funds for group investing. By comparison, a real estate trust may be a good vehicle for investors seeking to avoid probate, reduce estate taxes, and pass real property to another family member. 

Both an LLC and a trust are pass-through entities for tax purposes. They will collect rental income and pay expenses, with any income or losses passed through to the individual members or owners and reported on personal tax returns. Investors also may defer capital gains when rental property held by an LLC or a trust is sold and a replacement property is purchased within a specific period of time.

See my preivous posts on LLC For Rental Property and Real Estate Trust for more information. Please reach out if you’d like to discuss these entities for your asset protection needs.