All Forum Posts by: Greg Boots

Matt,

You should consider setting up a buisness, either LLC or "S" corporation for the business activity.

If there is an injury on the property due from failure to cure the defect wihthin the alotted time period set forth by the State you are opening yourself up to personal liability exposure not only from the tenant but also from the property owner.

Hi Jim,

It's good to have you here. Welcome to the site.

Depending on the type of investing you are doing it doesn't matter whether you are using an IRA, 401(k) or 401(a) there are still UBIT issue if you are running an active business.
Qualified plans have greater leeway in regard to UBIT exclusions than an IRA in the fact that the qualified plan can leverage the assets but no plan can run an active business and escape UBIT.

Hi Ryan,

Welcome to the site. It's nice to see another fellow investor-attorney here.

Greg

Alfred,

I agree with John on this transaction. What type of trust is it?
Normally, you can have rental properties with out incurring UBTI in an IRA. Once you start investing in entities such as trusts I don't see how this tax would be avoided using a trust where you are the trustee.
I would learn as much as you can and then proceed with caution.

Tyler,

I think you are on the right track, it is important to insulate you and your partners from liability exposure associated with the investments.
If you are not careful there is going to be some potential unexpected tax consequences by placing the properties in an LLC in which you all three have 1/3 interest. If you take a property and quite claim it to an LLC (or any other flow through entity) and only one person is on title you have just potentially created a taxable gift to the other members in the LLC. This tax consequence will depend on what the other members are contributing and the amount of equity in the property contributed.
You will also probably encounter transfer tax issues deeding the property directly to an LLC where the title holder on the property is not proportionate to the membership interest in the LLC.
Speak to an accountant about these issues.
You can certainly deed the properties into the LLC. However, you may experience difficulty in refinancing the properties while they are in the LLC. You will have much more difficulty in finding a lender that will allow you to transfer the debt to the LLC if the properties are residential.
On way around this is to pull the properties back out and refinance the properties in order to pull the equity and then deed them back into the LLC.

Hi Ted,

Welcome to the site. It's always great to have new members with extensive experience.

Greg

Evon,

In a nutshell a land trust is a grantor trust that can provide anonymity and be used to reposition property. However, a land trust provides absolutely no asset protection.
A LLC is a formal business that is formed under state law. There are many different forms of LLCs and they can be taxed as a "C" corp., "S" corp., partnership, or as a sole proprietor. LLCs are great for asset protection in most states are can be used for wholesaling depending on the tax treatment.

Here are a couple links to blogs that I contributed.

Land Trusts:

http://www.biggerpockets.com/renewsblog/2009/03/11/land-trusts-asset-protection/

Wholesaling:

http://www.biggerpockets.com/renewsblog/2009/03/04/wholesale-transactions-avoiding-dealer-classification/

Alex,

Welcome to biggerpockets! This is an excellent site to network and gather great information.

To your success!

Greg

Hi Shannon,

Welcome to the site, there is a lot of excellent informaiton here to help you with your investing.

To your success!

Greg