Is that for real? I was told by one of those companies that I should form a NV corporation and have a Land Trust for each property, then I won’t have separate tax returns for each property, only tax return for the LLC. So I deed the apartment to the LLC from the LT, and “sell” it. I don’t have to do a 1031 Tax Deferred Exxchange because there is no state tax, just federal. Then would I be losing my recapture, and depreciation. I understand you do not do annual taxes on those land trust even though they collect the rents. I’m confused.
Any comments… :-\
yep, you’re confused. if it were that easy to avoid taxes, everyone would do it, no?
the trustee holds title for the benefit of the beneficiary. the beneficiary ( or beneficial owner) takes all income and deductions normally allowed to the owner while the property is in trust.
otherwise, everything works the same as if you own it yourself.
True, a land trust does not pay income taxes. But you don’t have the rest of the story.
A revocable trust (a land trust is a revocable trust) is not a taxable entity. Instead, all income earned by the trust is passed through to the beneficiary of the trust and taxed accordingly on the beneficiary’s personal tax return.
The trust income is still taxed. The trust does not pay the taxes, the beneficiary does.
Also NV has no state tax. Keeping the property in a NV corp can help you avoid state tax. But you may also live in a state set up the same already.
While NV has no state personal income tax, your resident state may still tax your LLC income if your state of residence has a personal income tax return. Especially, if the income is earned from sources within your state of residence.