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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22696
Experience:  Taxes, Immigration, Labor Relations
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hi, If I buy a real estate using a LLC ( having as members

Resolved Question:

hi,

If I buy a real estate using a LLC ( having as members my family members) and I sell later the ownership of the participation in the LLC to a Foreight Corporation....what are the implications ? is possible? any tax implications?
Thanks,
Submitted: 10 months ago.
Category: Tax
Expert:  Lev replied 10 months ago.

Lev :

Hi and welcome to our site!
An LLC with several members is generally classified as a partnership. So if you will sell your partnership interest - the sale transaction will be reported on your tax return.
You may recognize a gain or loss depending on situation as (selling price) MINUS (basis)

Lev :

The basis of a partnership interest is the money plus the adjusted basis of any property the partner contributed. So basically whatever you contributed into the LLC would determine your basis.

Lev :

A partnership is the relationship existing between two or more persons who join to carry on a trade or business. Each person contributes money, property, labor or skill, and expects to share in the profits and losses of the business.


A partnership must file an annual information return to report the income, deductions, gains, losses, etc., from its operations, but it does not pay income tax. Instead, it "passes through" any profits or losses to its partners. Each partner includes his or her share of the partnership's income or loss on his or her tax return.


The partnership must furnish copies of Schedule K-1 (Form 1065) to the partners by the date Form 1065 is required to be filed, including extensions.
So - a foreign corporation will be a partner - and will receive form K1 from the LLC.

Customer:

Then if am tUS resident wich should be the righ structure to minimize income and estate taxes in real property prodcuing rental.??? LLC or LLC + foreight corporation?

Customer:

sorry NO US resident...

Lev :

You may use any structure - there is nothing right or wrong.
However if you are US citizen and want to minimize or eliminate estate taxes - the you need to reduce assets you own below the threshold which is currently $5,250,000.
If your assets are above that limit - your state might be subject of estate taxes after you die.
For estate tax purposes = all assets owned by you are considered - including your direct ownership, your interest in the partnership, shares in a corporation, etc.
If you are neither US citizen nor a resident of the US - the situation is different.

Customer:

I am not US citizen nor a resident of US!!!!

Lev :

Nonresident aliens are subject of estate taxes ONLY on US assets.
Thus - if you will not own any US assets - you will not be subject of estate taxes.
I hope you will live long enough - and estate taxes would be eliminated by that time.
But for now - the key to avoid possible complications with US estate taxes - not owning any assets.
Another popular way is to have US trust - which is created as irrevocable - and have the trust owns assets - so you will still use assets as a grantor and beneficiary while alive, and after you die - you should name your relatives as the beneficiaries who succeeded after your death.

Customer:

of...the issue is I want to invest in a real property in Florida.---and rent this property. I am thinking in hte best way/structure to buy the property....

Lev :

There is no "best" way - each structure might have advantages and disadvantages.
However - if that would be rental activity - income is generally reported to the entity which owns that real estate. If you personally own a rental property - that is your rental income. If the rental property is owned by the corporation - either foreign or domestic - that corporation reports rental income.

Customer:

ok thank you!

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22696
Experience: Taxes, Immigration, Labor Relations
Lev and 3 other Tax Specialists are ready to help you

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