Whether you are looking to invest in a New York City property or want to buy a home for personal use, if you are considering a condo purchase, creating a limited liability company may offer several important advantages.
In addition to offering personal liability protections, using an LLC may help to minimize taxation on the property and ensure privacy for you and your family.
1. Protecting yourself from personal liability
Using an LLC to purchase real estate may help protect you from legal and financial risk exposures. By holding the property in the company’s name rather than your own, you may be able to avoid personal liability should a lawsuit arise, including potential suits from future tenants.
2. Reducing your tax burden
You may also be able to minimize capital gains taxes and avoid estate taxation through an LLC.
If you create an LLC in New York and establish an offshore company as the sole owner, property the company owns as a foreign entity may not be subject to the U.S. estate tax after your death.
Additionally, corporate entities pay a slightly lower federal tax rate on capital gains than individuals do. When selling the property, you may gain a modest tax advantage by using a domestic LLC.
3. Maintaining your privacy
In September 2019, the New York State tax department began requiring that LLCs list the names and addresses of parties with ownership interests in one-to-four family homes and condominiums.
However, after facing backlash from buyers, officials reversed course; the new law may not apply to condo buyers and owners, who may still purchase a condominium property anonymously.