Buying the LLC instead of the property?

[Brian LaPorte]

We're looking at two opportunities where we might buy the LLC instead of the property. I haven't discussed with our attorney yet, but there seems to be some advantages. There are always negatives too. Just looking for any advice from experienced folks who have done this before. We're in Ohio. Not newbies, we have 8 properties ranging from SFH to 6-unit. Just have never even discussed the "buy the LLC" strategy until now.

Any feedback positive or negative is welcomed!

Thanks!

Brian

[Don Konipol]

@Brian LaPorte

To clarify further

By purchasing title insurance you are insured against almost all liens and encumbrances that may exist at the time you purchase a property.

If you purchase an entity that owns the property, there is no insurance against liens or debts against that entity, so if the entity had an undisclosed debt of say $50k, that debt would effectively be a lien against all assets of the LLC, including the subject real property.

These types of transfers are often done for tax considerations. The only win win in tax considerations are property taxes, where the fact that title is not transferred would probably not trigger a tax valuation appraisal. However as for depreciation, capital gains taxes, recapture, etc, the gain of one party to the transaction is offset by the loss to the other. But if the buyer and seller are in different tax brackets, and or different stages of property write offs and recaptures, it can work to both their advantages.

As everything in the real estate investment arena; risk vs reward