LLC Formations and Consultations Available In-Person, via Video Conference, or Teleconference
Lucas Real Estate, led by attorney Devin R. Lucas and CPA Courtney R. Lucas, offers unparalleled expertise in LLC formation and maintenance tailored for real estate holdings.
Contact us or book an appointment to discuss your LLC goals, including privacy, liability, and tax considerations for California LLCs.
Forming an LLC (Limited Liability Company) to hold real estate is a popular strategy for estate planning, tax benefits, liability protection, and privacy. While this practice is entirely legal in California and beyond, it’s essential to understand the potential implications before proceeding. Consulting with an attorney and/or tax professional is critical.
High-value properties, especially those in cash transactions, like homes in Newport Beach, Laguna Beach, and Coastal Orange County, are often held in LLCs.
An LLC will only meet your goals if it is properly formed and maintained. For example:
- Privacy: Privacy is achievable only if your name does not appear in LLC public records. Engaging a trusted third party, such as an attorney or family member, is often necessary for complete anonymity. However, new FinCEN requirements mandate that all owners of LLCs are reported, though not public record.
- Liability Protection: Liability protections are ineffective unless the LLC is correctly used and maintained, with all transactions—leases, payments, etc.—conducted under its name. Be cautious of “due on sale” clauses if transferring mortgaged properties into an LLC.
No matter the size of your real estate portfolio—from a single rental condo to extensive commercial properties—an LLC may be the right solution for you. Let’s explore the advantages:
Advantages of an LLC:
- Privacy: Adds a layer of anonymity for owners concerned about public records. Celebrities and high-net-worth individuals frequently use LLCs for security and privacy.
- Liability Protection: Protects personal assets from liabilities arising from the property, such as lawsuits or judgments. This “bomb containment” ensures that risks are isolated to the LLC-held property.
- Taxes: Offers pass-through taxation, allowing LLC owners to report income or losses on their personal tax returns, similar to sole proprietorships or partnerships.
- Property Tax: Proper structuring can avoid reassessment during transfers to LLCs. Learn more on our Prop 19 page.
- Estate Planning: Simplifies estate management by holding properties under a trust-owned LLC. It also allows for strategic gifting within IRS limits to reduce estate size over time.
Potential Downsides:
- Mortgage Restrictions: Transferring mortgaged properties into an LLC may trigger the lender’s “due on sale” clause.
- Ongoing Costs and maintenance: California imposes an $800 annual tax and various filing fees, annual and bi-annual filing requirements, and a new federal FinCEN filing is required for all entities. Additional county fees apply for property transfers.
- Co-Ownership Requirements: Multiple owners need a detailed Operating Agreement to define roles and responsibilities.
Costs and Timeline:
All LLC formations start with an initial consultation to evaluate your needs and ultimately determine if an LLC is right for you.
Basic single-member LLCs start at $1,000 (consultation fees are applied) plus state fees. More complex LLCs with multiple owners or joint venture agreements are quoted on a flat-fee basis.
Property transfers (putting a home into the LLC, etc.) can be added for modest additional fees.
State Filing Fees: $70 for initial filing, $20 for biannual Statement of Information, and $800 annual Franchise Tax.
Processing Time: Regular filings typically take 5–7 days. Rush filings are available for a $350 additional fee (paid directly to the state).
Contact us today at info@lucas-real-estate.com or call 949-478-1623 to start your LLC formation process.
