As internet searches for property records become more publicly accessible, it seems the LLCwhich we are so familiar in finding plastered across forms to protect the identities of high-profile buyers and developersis becoming more popular. This might not just be for the sake of privacy, the Commercial Observer explains, but for the amount of tax benefits, monetary protection, and relative flexibility buying into a Limited Liability Corporation provides.
Across the board, the LLC is treated as a partnership for tax purposes. In the case of New York City partnerships for real estate holdings, the LLC is an untaxed entityindivuidual partners pay personal income tax, but the LLC as an entity does not, unlike S and C Corporations which pay a staggering 8.85 percent corporate taxes in New York City. Also, real estate income in an LLC is tax-exempt. Developers may also choose to use an LLC because, as opposed to S and C corporations, LLC's have an easier time "pulling money out of a building" through mortgages or refinancing. This money that's taken out remains tax-free unless the property is sold. Got all that?
While LLC's provide a certain amount of privacy, the monetary protection and relative benefits they provide to entities seems reason enough for this fairly new developmentthe first LLC was established in the 1970s! In Wyoming!to continue availing itself to buyers interested in citywide real estate.
· The Rise of the LLC [CO]
· Keep My Boldface Name Out of It [NYT]
· Co-ops Now Bending to Accommodate LLC Buyers, With Strings [Curbed]