Why are LLCs a good fit for real estate holding companies?
Limited Liability Companies or LLCs are a good fit for real estate holding companies because they are straight forward and flexible. Its really that simple. Iowa's new LLC law has created some undue complexities, but a limited liability company continues to be an appropriate vessel for holding real estate in most situations. You should contact your tax professional to determine the appropriate tax status. My comments here relate solely to the type of entity best utilized for real estate ownership.
LLCs combine the concepts of a partnership with the liability protection of corporations. Within the bounds of the applicable statute, the means by which an LLC can be managed and controlled are virtually endless. Use your creativity. For example, minority shareholders can have equal decision making authority in relation to the issuance of new ownership certificates and other items of similar importance. Not that corporations don't have some flexibility, they just don't have the flexibility associated with the partnership concept.
So next time your thinking of creating a new entity for land ownership, look to an LLC first. It likely will meet all of your needs. Many of these same issues are discussed in the Iowa LLC Blog by attorney Marc Ward. Marc's blog is definitely worth a look if you are thinking of taking advantage of the benefits LLCs have to offer.
