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Mark Taylor
Mark Taylor, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2308
Experience:  Certified Public Accountant
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I have 4 commercial real estate buildings and 1 commercial

Customer Question

I have 4 commercial real estate buildings and 1 commercial undeveloped land. One of the buildings is fully leased, one is owner occupied, one is partially occupied, and the other is vacant. What is the best legal structure for commercial real estate properties in terms of taxes?
Submitted: 1 year ago.
Category: Tax
Expert:  Mark Taylor replied 1 year ago.

Hi, my name is Mark. I will be happy to help you with your questions. The most common structure for real estate is LLC. I would suggest forming an LLC for each of the buildings. The reason for this is liability protection.

Customer: replied 1 year ago.
Do you see any tax savings strategies we could implement in our situation?
Expert:  Mark Taylor replied 1 year ago.

LLC's would give you both Liability protection and flexibility. I am assuming that you have another operating business. The operating business should be paying rent to the building it is leasing. The LLC that owns the building would be able to deduct depreciation, property taxes, and other operating expenses.

Customer: replied 1 year ago.
If we have the LLC's owned by a trust so that my identity would not be revealed. Do you see any negative effects of that?
Expert:  Mark Taylor replied 1 year ago.

I do not see a problem with the LLC being owned by the trust. As long as the trust meets the Material participation rules the loss would pass through.