Investor · Marion, IA · Member since 2014 · 45 posts · 20 votes
Wondering if anyone has any experience in Iowa selling a fourplex that is held in a Coop? I think most of use hold them in a "123 Main St. Residential Coop" type entity. Does the buyer have to form a new entity or is it possible to transfer the ownership rights of the entity with the property?
Real Estate Investor · Lincoln, NE · Member since 2013 · 584 posts · 353 votes
10y
I don't think you want to take ownership in the entity. By doing so you would be assuming all liability that may be associated with that entity. Most small business sales are asset sales for this very reason. You don't know who that entity has interacted with and a year or two down the road someone could come out of the woodwork and sue the entity based on something that happened when you didn't own it.
For your own protection I would form a new LLC and just buy the asset that is the real property. That will keep you away from any liability that the old entity was exposed to.
Accountant · cedar rapids, IA · Member since 2013 · 99 posts · 46 votes
10y
For tax purposes you would want to buy the buildings from the Coop and form a new coop to hold the buildings in. If you were to just buy the coop you are buying the shares of the coop and you would end up picking up the depreciation of the building at that point in time. So if the coop was 5 years old...you would be missing out on the first 5 years of depreciation on the building and whatever else is on the depreciation schedule. There are others reason as well to do it this way but I just thought I would add this.