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How Should I Invest In Real Estate?

Our FAQ series offers insights into questions and concerns that we often hear in our discussions with clients. In this edition, Chris Castellano delves into real estate investing.
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There are a few different options, depending on the purpose that the property serves and your investment goals.

When it comes to business real estate, in terms of a structure that provides liability protection, we always recommend that clients own the property in a limited liability company (LLC). For personal property, an LLC may not provide liability protection. However, this structure can provide much-needed privacy because some states do not require LLC owners to list their names and home addresses in publicly available real estate tax records.

Trusts offer similar privacy protections. An irrevocable trust, which generally cannot be changed or terminated once it has been created, is often a favorable option for clients who intend to separate their property from their estate and pass it down to their children. In contrast, a revocable trust allows owners to keep their property within their estate and avoid probate.

Another option is the creation of a life estate that allows the property owners to live in the house while naming the ultimate beneficiaries. Thus, if a couple wanted to give their home to their child but maintain the ability to live there, a life estate could be the right choice. However, it is important to note that taking this route can come with some complications; if the homeowner decides they want to sell the house, they will need the beneficiary’s approval.

Crafting an approach to real estate investing that meets your individual needs requires careful thought. Our team is always ready to field questions on this topic and advise on the appropriate considerations and structuring possibilities aimed to help you reach your goals.

GMAG does not provide any express or implied guarantees that the information contained herein is accurate or complete. No representation, warranty or undertaking, express or implied, is given as to the accuracy or completeness of the information contained herein, by GMAG, its members, partners or employees, and no liability is accepted by such persons for the accuracy or completeness of any such information.

GM Advisory Group does not provide tax, legal, or accounting advice. This material is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting professionals before establishing any plan or engaging in any transaction.