Is the best way to invest with someone through a limited partnership, however each person have an LLC that forms the Limited partnership? Does an REIT provide the same protection? Can you join a REIT as a LLC or corp? :help
a limited partnership must have a general partner to absorb liability. this creates the need for a third entity to manage, etc.
you can achieve the same level of protection with a simple LLC. If you’re going to have one anyway, why complicate things by having the LLC’s be limited partners and introducing a GP? Keep it simple.
A strong management agreement and written agreements (including an exit strategy) within an LLC will offer you more protection than the LP.
REITs are highly specialized corporations; an LLC or corp can be a shareholder. However, I think a REIT has a minimum of 100 shareholders, so I don’t think this is what you are looking for.
Well I heard if the two partners of the LP are LLCs that would provide ultimate protection and also allow me to be able to invest in other LPs. Also I live in California and there is an extra tax on LLCs from gross income beyond $250K, so I hear if your transactions are through and LP formed in Nevada or Wyoming, with a license to do business in California you can avoid that. True?
For individuals, LP’s provide no more real protection than an LLC, but they come with extra costs and hassles.
CA will tax you on whatever you make anywhere in the galaxy…if they find out about it. License to do business in CA? CA will tax you irrespective of where the entity is domiciled. Got an office in CA? CA will tax you. Got a bank account in CA? CA will tax you.
Now, if the entity is domiciled outside CA, and owns property outside CA, and banks outside CA, you may be able to avoid CA taxes.
People who sell NV and WY corporations for “tax avoidance” are doing just that…selling NV and WY corporations. They are good at separating people from their money. They don’t care about your taxes after your check clears.
wow, so you’re saying CA Tax laws are out of control huh. My information came from the Rich Dad, Poor Dad’s Real Estate Tax Advantages audio book, 2nd disk track I believe tracks 12, 13, and 14. Not sure how accurate it is, or if I’m confused. Some one mentioned your name on another post I had, do you form LLC’s for people?
yeah, my info comes out of a book, too. but it has a different title.
yes. email me offline for info.
yes, Calif is extremely aggressive about collecting tax so if you are filing a personal return in Calif you need to think careful about how you structure your business. While having out of state corp. may be useful (I’m skeptical of such arrnagements), at the end of the day when it flows into your personal pocket, the Franchise Tax Board is going to be standing there waiting for their cut.
The $800 minimum tax on and LLC is avoided by using an LP correct? That would be one reason for me wanting to use an LP. The other reason would is because I would like to do different properties and limit the liability to just that LP and just one LLC that over sees the different business units, the LPs.
Does this make sense or is it obvious I don’t know what the hell I’m talking about? :help
LPs are still subject to the $800 CA minimum franchise tax.
I guess you weren’t listening when I said that an LLC provides the same liability protection as an LP, without the need for a GP. Same protection, simpler structure.
I don’t know how CA taxes business trusts. If the $800 tax doesn’t apply, it’s one way to get some limited liability without the cost. Responsiblities and income distribution can be defined in the trust document.