Real Estate LLC

[S T]

We all have discussed it is not advisable to transfer real estate into an S Corp

I have a client that is in a "panic mode" due to some commercial real estate - currently in a partnership h/w" and was served papers for a slip and fall in the parking lot. Has liability insurance and umbrella insurance policy (hopefully the insurance agent did their job) so now wants to form a S Corp or LLC.

He has 4 different commercial locations - Businesses at the locations also have their own Liability Insurance.

Would it be better to set up a LLC for each of the properties or put all under one LLC? I am thinking LLC for each property - each property has a value of approximately $ 1.5 mil - $ 2 mil

For those that are familiar with California LLC - I am also having an issue there due to the "fees" but the average annual rental on each are somewhere around $ 130K - $ 180K so I believe we are okay on the Gross Receipts test - just would have the $800 Annual Fee -- Correct?

Sandy

[Gary2]

Would it be better to set up a LLC for each of the properties or put all under one LLC? I am thinking LLC for each property - each property has a value of approximately $ 1.5 mil - $ 2 mil

Pass the core question to an attorney, and then comment on the tax and financial implications only. In addition to the items you've identified, don't forget any issues about selling just one of the properties, selling a share of one or more properties (say they divorce, or even don't divorce but one spouse wants out of a particular property), doing a like-kind exchange, getting mortgages, etc.

Multiple LLCs have an attractive flexibility.