Liability Exposure vs Tax Exposure, they seem to be at odds.

[Jon S.]

Based on responses on BiggerPockets, I've realized that addressing these two concerns is not necessarily complimentary, one can cause problems with the other. In Brandon Hall's article on tax planning "Higher Earner Vs Smart Investor", he wrote "It's not about how much you make. It's about how much you keep.". The same can be said regarding liability planning as well. I don't want to lose earnings to taxes but I also don't want to lose assets to unforseen law suits. The problem is that putting property in an LLC may reduce liability exposure but may also increase tax exposure. It gets complicated; within the LLC there are options to choose as well which effect taxation. If the property is ever retitled, even from the LLC to personal name, this will trigger a taxable event. I would really like to see - and appreciate - a broad discussion, to hear the views of lawyers and CPA's, on the pros and cons of LLC's, Landtrusts, personal ownership, S-Corps, partnerships, and how to use them to strike that best balance of both reduction in liability exposure and best tax planning. Can we have our cake and eat it too? Please add others to this thread. If there are any lawyers and CPAs here, who can speak about personally held properties, LLCs, Landtrusts, and other entities for real estate, please add them. @Brandon Hall @Brandon Turner

https://www.biggerpockets.com/renewsblog/2015/12/06/higher-earner-versus-smart-investor/

[Matthew Kreitzer]

You're missing an element of the analysis here. There are, what I would consider, to be three factors at play that are weighted against each other;

1) Asset Protection

2) Overhead control and profit maximization.

3) Tax estate maximization.

A fantastic tax plan or an asset protection plan may cost you more overhead, or it may increase your overhead depending on susceptibility to suit. I wouldn't say that tax planning and asset protection are necessarily *directly* at odds when you take into consideration Limited Partnership taxation. (Defer to Mr. Hall) Merely that they definitely can be, but that isn't necessarily the end of the discussion.