Your Wealth, Health, And Lifestyle Newsletter
1.jpg2.jpg3.jpg4.jpg

How To Invest In Real Estate – Types Of Ownership

With the stock market the way it is these days, people are looking for different places to invest their money and one of those places may just be real estate. I know I know, we’re coming through, and in fact are still in the middle of, one of the worst recessions in the history of America that was fueled primarily by a huge bubble in real estate investing…

But the fact of the matter remains that prices on many real estate investments are dropping dramatically because of the recession which means that it may be time to start looking to get back into the real estate game.

If you are new to real estate then you have come to the right place because today I want to talk about several different ways of investing in real estate and I wanted to specifically talk about the different types of ownership that you can come to expect.

How you own your real estate is important for a number of reasons including tax purposes, as well as professional liability (what happens if a tenet in your rental house slips and sues you?!). Today I will discuss several ownership entities that you can choose from.

The first type of ownership is simply individual ownership. In this case, all the profits and liabilities flow directly to you as an individual but you are also exposed to the greatest risk.

The next type of ownership is corporate ownership which allows you to limit your liability and also gives you the opportunity to transfer the ownership interest without triggering local real estate transfer taxes in some cases. There are several types of corporations you can form including a C. corporation and an S. corporation. Because an S. corporation allows profits to flow through to you as an individual, many investors prefer this method but check with your accountant and tax lawyer first just to be sure.

The next type of ownership is partnership ownership. If you have several investors going in together to purchase real estate than a partnership may be the right ownership entity for you. Partnerships are usually not treated as separate taxable entities but instead allow everything to flow through to the individual including profit and losses.

Finally, another type of ownership is trust ownership. Many states allow the creation of trusts that operates solely to title real estate. In this case the trust may not be treated as a taxable entity but as a pass through entity sort of like a partnership. This kind of entity may not be for the average real estate investor as it can be a little more complicated in certain circumstances.

However you choose to own real estate whether as an individual or with your own Corporation or through a partnership or a trust, make sure that the underlying real estate investment is sound and the potential for profit is large enough to make it a good investment.

Written by Jason Markum

You May Find These Links Interesting:

    No items matching your keywords were found.