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Investment Property Legal Structure
Summary
French citizens investing in US real estate can consider forming an LLC for limited liability and flexible management. LLCs offer pass-through taxation, but require annual fees and regulatory compliance in California. Non-resident aliens are subject to US taxes on rental income, with potential benefits from the US-France tax treaty. An operating agreement can outline investment, profit distribution, and management roles. Forming an LLC involves naming the LLC, filing Articles of Organization, appointing a registered agent, creating an operating agreement, obtaining an EIN, and filing a Statement of Information.Full Conversation
Thanks for sharing the details! Based on your situation, here are some general steps and considerations for setting up a legal structure for your rental property investment in San Francisco:
Business Structure Options:
*. Limited Liability Company (LLC)
- Advantages:
- Limited liability protection for owners.
- Flexible management and profit distribution.
- Pass-through taxation (income taxed once at the owner's level).
- Considerations:
- Annual fees and regulatory requirements in California.
*. Corporation (C-Corp or S-Corp)
- Advantages:
- Limited liability protection.
- Potential tax benefits and deductions.
- Considerations:
- Double taxation for C-Corp (taxed at corporate and personal income levels).
- More regulatory and administrative requirements.
*. Limited Liability Company (LLC)
- Advantages:
- Limited liability protection for owners.
- Flexible management and profit distribution.
- Pass-through taxation (income taxed once at the owner's level).
- Considerations:
- Annual fees and regulatory requirements in California.
*. Corporation (C-Corp or S-Corp)
- Advantages:
- Limited liability protection.
- Potential tax benefits and deductions.
- Considerations:
- Double taxation for C-Corp (taxed at corporate and personal income levels).
- More regulatory and administrative requirements.
Tax Considerations:
- Non-Resident Alien Taxation: As French citizens, you and your father may be subject to US taxes on income generated from the property.
- Withholding Requirements: There may be specific withholding requirements for foreign investors.
- Tax Treaties: Review the US-France tax treaty for any benefits or exemptions.
- Non-Resident Alien Taxation: As French citizens, you and your father may be subject to US taxes on income generated from the property.
- Withholding Requirements: There may be specific withholding requirements for foreign investors.
- Tax Treaties: Review the US-France tax treaty for any benefits or exemptions.
Rental Income Distribution:
- Operating Agreement: For an LLC, create an operating agreement outlining each party's investment, profit distribution, and management roles.
- Compensation: You can set up a salary or compensation for your management role within the business structure.
Would you like more detailed guidance on forming an LLC or corporation in California, or do you need specific information on tax implications?
- Operating Agreement: For an LLC, create an operating agreement outlining each party's investment, profit distribution, and management roles.
- Compensation: You can set up a salary or compensation for your management role within the business structure.
Would you like more detailed guidance on forming an LLC or corporation in California, or do you need specific information on tax implications?
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