I appreciate your economical insight into “How Many Properties per LLC ?”

The common response is to set up an LLC for each property. This is usually based on advice from individuals who are charging you to set the entities up for you.

I also got some insight into how much it cost to have my CPA file a tax return for each entity. When you add it all up, I agree their needs to be a balance of costs vs. protection and 3-5 properties per LLC sounds like a good starting point.

You close the front part of your exchange, selling a property owned by one of your LLCs. You ID an upleg. However, the lender requires you to relinquish the property to yourself (as Scott indicates), because they won’t lend to your LLC and won’t allow it to take title to your upleg.

In many cases that’s a taxable event and goodbye tax deferred exchange. This nearly happened to a referral, sent to me a couple years ago, AFTER they’d closed the escrow on the front end of an exchange. They owned the property in a formal general partnership. We solved it, but it took a few grand to do it.

Bottom line? The IRS is pretty much looking at the spirit more than the function now — but beware. Scott’s warning to see your attorney wasn’t just for show — he knows what he’s talking about.

Great stuff, Scott.

However, you can easily search and see who are the registered agents and officers in the LLC with all the paperwork being filed electronically. So if you were trying to protect your identity you wouldn’t be an officer in your LLC.

I have seen people who only list their attorney as the officer and registered agent of the LLC. I don’t know the ramifications of this.

Also you would want to have your tax notices mailed to your attorney’s address so there is no personal connection with the property whatsoever.

I am sure there are more ways to try to protect your assets and an attorney would best be consulted to advise.

And while we are talking about protecting your assets, I would recommend umbrella insurance.

Lastly, let me give the same disclaimer I give my clients when we start getting into these subject areas: I am not an accountant or an attorney. I do not give legal or accounting advice. Should you have any questions please consult your attorney or CPA.

Sorry Scott. Didn’t mean to take your post off subject.

I actually have always been advised to never have any LLC with your personal name. It makes it easier for people that are suing you to find your assets. Ultimately, even though you have the LLC to protect the asset, you still have to defend yourself in court.

On a side note, I have heard people name their LLC after their own name in order to past a quick glance of the title by the lender. Joe Blow names his LLC … Joe Blow LLC.

I figured the banks have enough on their hands these days than to go after us for simply semantics!

However, I advise them that the transfer of title to the LLC may cause the lender to invoke the “due on sale clause”. I have never seen this happen when title has been quick claimed to a LLC, but I believe they should know all the facts.