How to Own Your Real Estate

How to Own Your Real Estate

Real estate does not just include your primary residence. It also encompasses other properties you may have, such as a vacation home or property you rent to tenants. How you own each of these types of real estate isn’t always the same or as straightforward you might think. Let’s examine some of the options available to you when your portfolio includes any of these pieces of real estate.

Primary Residence

Your primary residence receives a special tax treatment, and that is why you should examine the ownership of your home. Some states offer couples tenancy by the entirety, which can protect the home against creditors seeking to collect debts owed by one of the spouses. An exception to this protection may be federal tax liens applied by the IRS.

Tenancy by the entirety preserves relevant tax benefits and should one of the spouses die, ownership of the primary residence automatically transfers to the surviving spouse without the need for probate. If tenancy by the entirety is not available or otherwise an unfavorable option, transferring ownership of the home to a joint revocable trust us another way to protect it from creditors and avoid probate.

If you are single – as in unmarried – owning a primary residence has tax benefits for you as well. If your primary concern is trying to protect your home against creditors, placing it into an irrevocable trust may be the best course of action – even if it means you sign over some control of the property over to a co-trustee. (Always consult with a lawyer before attempting tax planning or asset protection on your own!) Placing real estate into a revocable trust can allow you to take advantage of tax benefits and help your loved ones avoid the costs of probate should the worst happen.

Additionally, transferring your primary residence to a trust may eliminate the Bankruptcy homestead exemption in some jurisdictions. This is because the trust, rather than you, is considered the owner of the property.

Should you have any questions about ownership of over your home and any of the entangling complexities related to probate, taxes, and more, reach out to a knowledgeable estate planning attorney like Alee Gossen at Gossen and Schaller, PLLC.

Vacation Home

A vacation home can serve an important role in the life of a family. Not only may it be a valuable asset, but it is also a place that may hold a lot of sentimental value for your loved ones. You may be able to ensure an easily transition to the next generation and protect it from creditors, if you form a limited liability company (LLC) to own your vacation home.

By establishing an LLC, you’re laying the ground rules for how the property will be used and maintained. You will also designate what would happen to the vacation home when you pass away. These are important features, especially for someone who’s concerned about keeping a treasured property in the family – and safe from that family’s own internal conflicts, should any come to pass.

An added benefit of placing ownership of your family vacation home into an LLC is that it can limit your liability for outside claims. Should a judgment against the LLC be rendered, the creditor may be prevented from going after your personal assets. Only those belonging to the LLC – which may include the property or a bank account dedicated to its upkeep – may be claimed.

Likewise, if you lose a lawsuit and a creditor is eyeing your personal assets, the vacation home’s ownership by an LLC may save it from a forced sale or make it very hard for the prevailing plaintiff to attach the assets within the LLC. Considering the costs and benefits to forming an LLC to hold onto a vacation home may help you alleviate worries about the financial situation of each succeeding member of the LLC.

Note: A single-member LLC, in some states, is not protected against personal creditors. This belief behind these laws is that creditors should be able to seek relief through your LLC interests to satisfy their claims because there are no other members that will be negatively impacted by seizure of money and property owned by the LLC.

If a vacation home has been in your family for many years, make sure it’s protected with the help of one of our attorneys at Gossen and Schaller, PLLC. We can help you transfer ownership of this property to a new or existing trust, or form an LLC to help you protect your family’s legacy.

Rental Property

Rental properties are important – and different – to their owners because they provide a source of income rather than serve as a residence for the owner. Because other tenants are living on your property and may change out every few years, asset protection is probably your primary concern.

Rental property owners are at a high risk of lawsuits, and transferring ownership of these buildings to an LLC can help the protect their personal liability. Should a renter get injured or sue the LLC for any other reason, any damages awarded to them may only come from accounts owned by the LLC.

To the same effect, your personal creditors can’t easily seek your LLC membership interests in collection attempts. If you want to learn more about forming an LLC to protect your liability, have an attorney from Gossen and Schaller, PLLC check with your area’s laws to ensure this form of creditor protection is possible.

Give Us a Call Today!

If you are concerned about the type of ownership over any property in your portfolio, consult with Gossen and Schaller, PLLC. We can help you protect the property, your personal accounts, important tax benefits, and help you ensure that the real estate can easily transfer to your loved ones upon your passing.

Give us a call at (405) 267-9921 or contact us online so we can discuss your current and future real estate holdings and the best way to protect them for generations to come.