With all of the inflation happening and relatively low interest rates I've been looking for alternative investments. I ran into a very nice 12,000 sf commercial building in a prime area for 2.9M.
Are there any benefits to setting up a holding company to purchase it under vs my main operating LLC? The plan would be to move my business from the location we rent into this building after making some modifications. If I were to set up a holding company and lease it to my other LLC does this provide any real world benefits or layers of protection? My CPA is out of the office for a week and this deal came up fast.
Could the holding company be owned by my existing LLC or would that negate any benefit? Existing LLC is a pre-martial asset and I would at least like to maintain an argument for this building to fall under that umbrella.
Buying a big building!
Re: Buying a big building!
Check out youtube videos by Mark J. Kohler on this topic. He's a tax attorney & CPA dealing with small business, and very vocal about these structures, doing it himself as well.
I believe he'd advise it being a separate LLC to keep your other LLC from liability, but give him a listen.
I believe he'd advise it being a separate LLC to keep your other LLC from liability, but give him a listen.
"The Quality of the Answer Depends on the Quality of Your Question."
Re: Buying a big building!
Not a lawyer, but yes it should be in a separate LLC to keep the building's liabilities separate from your other LLCs assets.
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Re: Buying a big building!
When we were looking for rentals, noticed the Owners listed were like 232 state street LLC, 300 lane 42 LLC so I believe they create a separate LLC to hold each property. So not to mix the liabilities across all properties.
Invest when you have the money, sell when you need the money, for real life expenses...
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Re: Buying a big building!
Separate LLC, typically.
If you’re financing, your lender may even require it so that they have a single purpose entity as the Borrower.
If you’re financing, your lender may even require it so that they have a single purpose entity as the Borrower.