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What business structure should I use for my property investment?

For the purposes of residential real estate, we recommend setting up a US domestic LLC. This is the optimum structure for small-scale foreign investors. Individual ownership is the easiest from a tax perspective but provides you no protection from legal responsibility – and your personal information will be on public record – which could prompt additional investigation into foreign transactions.

A limited liability company (LLC) is affordable to establish, easy to maintain and generally recommended to foreign investors. The best features of the LLC are the individual protection of liability, and it is also treated as a “disregarded entity” for tax purposes. Basically, this means the IRS doesn’t see it as a separate entity, and everything is taxed and reported at an individual level.

US domestic corporations are not recommended due to the double taxation that results. While foreign trusts have become popular options in recent years, trusts are being scrutinized more heavily by the IRS. If they get re-characterized by the IRS, they could end up being taxed as a corporation and that is not ideal!