All Forum Posts by: Peter Seely

Hi Rich and Brad,

Thank you for your insight. I found it very helpful. I spent about 4 hours today reading about LLC's and other structures and I have decided to set an LLC up due to this and the advice I recieved here. I will have to find a good real estate lawyer in Atlanta first.

I also called the IRS in regards to some questions and all I can say is I want their job, all they did was refer me to publication this and publication that, they sounded like a robot. No thought process whatsoever. No offense to those that may know someone working there.

My question to them was:
Yes, I know another tax question.

My wife and I open and LLC and hold our rental property under it with insurance. Should we do it as a partnership or S corporation? If it is a partnership does this mean we file 3 returns, one for the LLC, one for Myself and one for my wife?

My second questions, in a partnership, how do we get access to any rental income owned?

My third question, If an S corporation, I assume we pay ourselves through dividends, are these taxed a 30% witholding tax after our income had already been taxed? In other words is my rental income being double taxed when dividends are distributed to owners, once as part of the S corp(although deductions apply) and again as a dividend(30%). I assume 30% if its the same as stock dividend, that is what we get taxed as foreigner.

I am trying to narrow down the type of structure before I go to an accountant and lawyer. Once I do this than I can just go to the lawyer and say set up an LLC please for us as a partnership or S corp.

I can go to my accountant and then say, we are setting up a LLC as partnership and S corp...please advise.

Thanks again for all that have assisted me in this process. I am feeling good about it so far.

Hi,

I will also piggyback since I have a related question.

Since many recommend having both an LLC and liability insurance, can the insurance be used to protect your assets within the LLC from potential lawsuits, meaning the SFH's within the LLC? So as long as I have insurance I can protect my assets wtihin the LLC from a possible lawsuit.

What if I just ensure my tenants have liability insurance to? Would this provide some protection?

Thanks

Peter

Hi,

Well, I see your point J Scott, I guess the end of the day it is better to be safe than sorry.

How would I receive rental payments from the rental? Would this be distributed through to me in the form of dividends? If so because I am offshore I then have to pay a 30% witholding tax. If I do set up an LLC will I need to file a tax return for the LLC and for myself every year? Does my LLC have the same deductions tax wise. I know, I know, I should get an accountant. It is time......

As always, thanks again.

Hi Ivan,

Thank you for providing the steps. I think I need to get some professional help regardless, i just wanted to have an idea what I need when I go in there.

Great tips.

Peter

Hi,

I guess a couple things come to mind to me in regards to an LLC and questions they raise:

1) An LLC doesn't prevent lawsuits just protects your other assets as LONG as you haven't broken the corporate veil/mixed funds and been negligent. In itself this is alot to control and manager and faith you put in other people to manage. You still have to go through the legal process as owners of the LLC and you still risk any assets under that LLC, correct?

2) Whether I have an LLC or not if negligence was found an LLC will not protect my personal assets, right?. I don't plan on being negligent but sometimes it comes down to perception of negligence between two parties.

3) Wouldn't negligence be the only reason a tenant would sue a landlord which would still have to be proved or disproved regardless of an LLC or privately owned? (I can't remember from my last law course 12 months ago) Should the verdict come back as you were negligent than regardless of an LLC or not they can come after personal assets outside of the LLC?

So, woudln't it make more sense for me to keep it in my personal name where I have more control and don't risk adding additional factors such as having to prove on top of the negligence suit, that my LLC was not pierced, which from what I hear is much more difficult then one believes as it is the first thing a plaintiff will attack in such a case. I can Buy great insurance including a large Umbrella and of course, cover my $^%#@ by recording everything when it comes down to tenants, the state of the dwelling etc and ensure I am not negligent, giving my tenant no reason to sue?

Not to mention I am an out of country investor so this in itself is a nice form of protection as the tenant would unlikely be able to track other assets down due to my situation. How is a landlords assets tracked, using his US ITIN number or EIN if an LLC? If so all this will show is the rental property and income/loss from that. Not my other assets?

I will have to research this further and more importantly find a great lawyer that can advise me.

Thanks everyone for your insight, I am just trying to understand the whole landlord/tenant thing before I buy.

Your longwinded friend,
Peter

Hi Scott,

As they say, better safe then sorry.

Thanks for your real life situation, its true, it could happen anytime and the LLC and insurance will at least protect my other personal assets from some lawsuit. I can't say I am a fan however, that the LLC doesn't protect that asset under the LLC such as the home being rented, I assume this is where the insurance comes in?

Peter

Hi Jimmy,

Thanks, I think I will do that instead.

Good to hear, the Captn and I are also long time buddies.

Hi J Scott,

I totally understand your points. I guess I thought because I am an out of country investor and it was my first investment in USA and I don't have millions in assets I may be able to avoid this. I have read that an LLC can to easily be pierced in a suite against it and most times they end up not protecting you at all. I guess thats why you get a really good attorney.

As far as tax, I thought there wasn't any tax benefits of an LLC but there is if you decide to go through an S corp or something? Again, need to find myself a reputable accountant because I am out of country.

I guess if I set up an LLC based in Georgia then at least this makes opening the bank account easier because It would be a US LLC. Also, if I open an LLC and want to place $3000 emergency fund in there to start is this allowed or am I then considered mixing up personal funds?

Either way, a good lawyer will be needed, any suggestions as to names etc in Atlanta? Same applies to a good accountant in Atlanta? SInce I have little to no networks in Atlanta it is difficult for me to know reputations etc? I understand however if you don't want to giveaway any of your contacts, if you do shoot me a PM.

My wife and I are coming over to Atlanta July 21 for 3 days to meet some contacts and hopefully close on a property once we find one. Hope we didn't put the cart before the horse by booking our tickets before we found the property.

Sorry for the longwinded message but I do appreciate you opinions.

Peter

Hi J Scott,

It is not for a specific property it is a general non compete agreement. He will be searching for a property for us but I just didn't like what this agreement entails. From my understanding, if a deal came up through another wholesaler I would not be able to act because I have to go through him? Am I correct in believing this? In addition, its valid for 5 years?

I guess I will move on and keep searching for another wholesaler in Atlanta. I am finding this so difficult.

Thanks again for your advice.

This forum has been a blessing and when I finally purchase that first US property I will owe half the forum a drink. lol

Hi Chris,

Thanks for the tips, great help. So to confirm, If I open an LLC I need an IEN but will I still need an ITIN for myself and my wife who the income will be passed to or is it wise just to file as an S corp?

Also, How do I open up a US bank account for my LLC when I am out of country? I thought about trying HSBC since we bacnk with them here.

My final thought was scrap the LLC and just purchase the appropriate insurance and Umbrella and use my online brokerage account that is based in the US to collect rents etc.

Thoughts?

Peter