Business entities to hold REal estate

In Minnesota, various business entities can hold real estate, each with distinct legal implications. Common entities include Limited Liability Companies (LLCs), partnerships (general and limited), corporations (S and C corporations), cooperatives, and trusts. Each structure offers unique benefits and considerations regarding liability, taxation, and operational flexibility.

Limited liability companies (LLcs)

LLCs are a popular choice for holding real estate due to their simplicity, flexibility, and limited liability protection for members. They are often used for investment properties or joint ventures, allowing members to limit personal liability while benefiting from pass-through taxation.

Partnerships

Partnerships, including general and limited partnerships, can also hold real estate. In these arrangements, real estate acquired for partnership purposes is treated as partnership assets, even if the title is held in one partner’s name. This ensures equitable treatment of the property among partners.

Corporations

Corporations, both S and C types, may also own real estate. They provide limited liability to shareholders but are subject to corporate taxation, and the tax treatment between an S-corp and a C-corp needs to be analyzed by a tax professional before deciding on either type.

Trusts

Trusts and other specialized entities are also used for holding real estate and can be tailored to the client’s long term goals for their beneficiaries or their family.