Holding property in my name for family
Hi everyone,
Question to hopefully a simple problem. My wife's father owns 2 commercial properties that he has sold the "business" (Tire shop) to someone else but continues to receive the rent for the 2 adjacent properties. He does not live in the US and the properties are currently under his sisters name but she needs them off her name and he has asked us to step in.
Aside from basic family issues that can arise, what are some of the liabilities that we should worry about and how can we structure this to limit them? Would putting the properties in an LLC cover us? We are also afraid of getting hit with taxes related to the rental income since we aren't receiving the proceeds for ourselves.
He lives out of the country for reference.
Most Popular Reply
You should check with attorney, I would think once the property is listed under the LLC then your somewhat insulated, but someone will be paying taxes on rental profits and paying for repairs and if owned by daddy sounds messy, if his sister signs over the property to your new LLC how would the property be recorded as a sale, capitol gains involved. How did the dad and sister work it out before.
Could the dad transfer the property into a trust, naming you as a trustee, and a beneficiary. the income generated is property of the trust, the expenses are reported from the trust, you'd basically be the manager and he'd be the owner, as trustee you can make decisions,(you'd have a power of attorney) but he'd still be the primary grantor/ owner of the trust, your compensation for management is paid to you from the trust. A revocable trust would mean he could make changes, a Irrevocable trust would mean once trust is set up he can't make changes so depending on how much power he wants to retain I would start with a revocable trust,, if he were to die it would transfer and become a irrevocable trust.
Our family did a similar set up.