Many people decide to buy properties and put them in the name of a company. At first glance, it seems like a wise decision, but things aren’t always what they seem. Today, I would like to dive a little deeper into this topic.
Initially, you may think you are on the right track, as this could potentially increase your business equity, making the value of your shares look attractive to potential shareholders.
However, as with any other major financial decision, you must think about your long-term goals as an individual (and a company) to determine if registering the property in the company’s name is the right move.
There are some advantages when buying property buying a property under a company:
Increased privacy, as it will be registered in the county as a company and not under your name, limited liability in the case of a lawsuit, tax benefits and other opportunities.
On the other hand, there are also some disadvantages depending on the type of business structure and how many partners own the business. In the case of an LLC, which is a business entity with its own assets and income, the purchase of property, either residential or commercial, immediately impacts all members since they would all be equal owners unless agreed otherwise in corporate documents.
While it is true that under this business structure personal properties are not included as part of the company’s assets, the properties acquired in the company’s name will be subject to all the same legal implications, meaning that in the case the company is sued they can only sue to the extent of the value of the assets owned by the company.
It is also possible that when purchasing a commercial or residential property in the company’s name, it may be difficult to obtain an interest rate as favorable as the one offered to individual borrowers.
As you can see, buying a property under a company has many implications that should be considered. It can be very beneficial if handled correctly, which is why it’s extremely important to seek the advice of an attorney who specializes in this matter, especially when it comes to the investment of large amounts of money that may impact the your personal and business stability.