Many people who buy homes or other types of property as investments will consider corporations and LLCs to limit investment risks. For example, if you have some money you’d like to invest and the stock market just seems too scary and volatile these days, you might very well be thinking of buying a single-family home, or an apartment complex of several units, or a commercial property, as an investment. In order to protect yourself from liability, you could incorporate yourself or form an LLC (limited liability company) as a defense against lawsuits and other problems that could arise.
Buying a home, multi-family home, or a commercial property as an investment is an attractive idea to many people. You will make money from the investment in the form of rent for as long as you own the property, and then you’ll make money as it appreciates, all the way up to the time you sell it (that is, if the local real estate market is healthy at the time of the sale). However, since you will be owning a commercial venture, you will be responsible should anyone be hurt on your property, and a lawsuit from an injured tenant could wipe you out financially. So, in order to shield yourself from lawsuits and other risks, you should think about incorporating yourself and become a business.
You could incorporate yourself, and that will give you liability protection – but there aren’t too many tax benefits from that option. A partnership has tax advantages, but does not offer liability protection. An LLC, on the other hand, offers both, and may be your best bet.
Incorporating yourself has many obvious benefits but comes with responsibilities too. Before you take any steps, be sure to sit down with a financial adviser and go over your options in as much detail as possible. You want to be sure you find the right solution for your needs.
