@Courtney Wenzel There are several reasons to use a land trust, e.g., anonymity of ownership, avoid doc stamps with encumbered real estate, avoid personal judgment liens from attaching to the real estate, buying at auction, keeping transfers private. Here are some differences between a land trust and LLC:
Land Trust
Anonymity - if the land trust is set up with a nominee trustee, then title to real estate can be held privately. Privacy - a land trust is not recorded, so a third party can not discover the parties to the trust. Transfer taxes - encumbered property transferred into a land trust is exempt from doc stamps. Asset protection - the beneficiaries of a land trust are not liable for judgments against the trust; however, judgments against a beneficiary can be levied against the assets of a land trust.
LLC
Anonymity - if title is taken in the name of a FL LLC, a third party can discover who is associated with the LLC by looking up the member/manager information on sunbiz.org. However, if the FL LLC is set up with a WY LLC (or other LLC that does not disclose the identity of its member/mangers), then anonymity can be achieved. Privacy - information about the members/managers of a FL LLC is disclosed on sunbiz.org because of required public filings. Again, this can be avoided if using a holding LLC as discussed previously. Transfer taxes - encumbered property transferred into a FL LLC is not exempt from doc stamps. Asset protection - members of an LLC are protected from claims against the LLC. If a FL LLC has only one member, then a judgment against a member can be levied against the ownership interest of the LLC, i.e., you can lose your LLC. If the FL LLC has two or more members, then a member is protected from levies against the LLC ownership because of "charging orders."
I know this is very brief, but if you want to learn more, you can view my youtube channel real estate asset protection for several videos on this subject.
There is ZERO difference tax wise between a Florida land trust and an LLC. Since a Land Trust is nothing more than a pass through entity, meaning all profits and losses will pass directly through to the beneficiary, you can appoint that LLC as the beneficiary of the land trust, get all the tax benefits of having an LLC and get all the other benefits of the Florida Land Trust.
Florida Land Trusts are a very powerful investment tool for both flips and buy and holds.
@Courtney Wenzel There are several reasons to use a land trust, e.g., anonymity of ownership, avoid doc stamps with encumbered real estate, avoid personal judgment liens from attaching to the real estate, buying at auction, keeping transfers private. Here are some differences between a land trust and LLC:
Land Trust
Anonymity - if the land trust is set up with a nominee trustee, then title to real estate can be held privately. Privacy - a land trust is not recorded, so a third party can not discover the parties to the trust. Transfer taxes - encumbered property transferred into a land trust is exempt from doc stamps. Asset protection - the beneficiaries of a land trust are not liable for judgments against the trust; however, judgments against a beneficiary can be levied against the assets of a land trust.
LLC
Anonymity - if title is taken in the name of a FL LLC, a third party can discover who is associated with the LLC by looking up the member/manager information on sunbiz.org. However, if the FL LLC is set up with a WY LLC (or other LLC that does not disclose the identity of its member/mangers), then anonymity can be achieved. Privacy - information about the members/managers of a FL LLC is disclosed on sunbiz.org because of required public filings. Again, this can be avoided if using a holding LLC as discussed previously. Transfer taxes - encumbered property transferred into a FL LLC is not exempt from doc stamps. Asset protection - members of an LLC are protected from claims against the LLC. If a FL LLC has only one member, then a judgment against a member can be levied against the ownership interest of the LLC, i.e., you can lose your LLC. If the FL LLC has two or more members, then a member is protected from levies against the LLC ownership because of "charging orders."
I know this is very brief, but if you want to learn more, you can view my youtube channel real estate asset protection for several videos on this subject.
As a side question, if you use a FL Land Trust to hold title of the FL property, and an LLC as a beneficiary for outside liability protection, does the LLC need to be a FL LLC or is it acceptable to use an out of state LLC in that case (like a WY series)?
Would the FL Land Trust be considered the local entity that can act in FL court (eviction, code enforcement, ...)? Or should the beneficiary LLC be registered in FL too and be the complainant/respondent?
If the former case, if the trustee is an individual, can that person represent the Land Trust in court pro se? Or do we need to use an attorney hired by the trustee to represent the Land Trust (and/or beneficiary)?
@Mike S.. Typically I will use a FL land trust to a FL LLC that is held by a WY LLC for anonymity. Assume you have 3 properties then we would set up 3 land trusts to one FL LLC held by one WY LLC (some clients opt for 3 FL LLCs all held by the same WY LLC).
The property manager will handle the eviction but if you do not have a PM then it would be the Trustee (assuming you did not limit the trustee's powers in the trust document). I do not know if the trustee must hire an attorney.
There is ZERO difference tax wise between a Florida land trust and an LLC. Since a Land Trust is nothing more than a pass through entity, meaning all profits and losses will pass directly through to the beneficiary, you can appoint that LLC as the beneficiary of the land trust, get all the tax benefits of having an LLC and get all the other benefits of the Florida Land Trust.
Florida Land Trusts are a very powerful investment tool for both flips and buy and holds.
Can you explain why only unrest in Florida is so powerful, especially in terms of protecting assets?