Should Foreign Buyers Purchase Through an LLC?

For many foreign buyers, purchasing U.S. real estate through a U.S. or foreign limited liability company (LLC) — or through a foreign corporation — provides significant advantages in estate tax planning, liability protection, and privacy.

Estate tax advantage: A non-domiciled foreign national who holds U.S. real property directly is subject to U.S. estate tax on that property at rates up to 40% with only a $60,000 exemption. A foreign national who holds U.S. real property through a foreign corporation does not hold "U.S. situs assets" directly — the foreign corporation shares are not U.S. situs assets — potentially eliminating U.S. estate tax exposure entirely.

Liability protection: Holding real property in an LLC protects the owner from personal liability for claims arising from the property — slip and fall, environmental, and other property-related claims. The LLC's assets can be at risk, but the owner's personal assets outside the LLC are protected.

Privacy: In states that do not require the disclosure of LLC members (such as Wyoming and Delaware), property ownership through an LLC provides a layer of privacy — the property record shows the LLC as owner rather than the individual's name.

Important caveat: The tax benefits of corporate ownership come with compliance obligations — annual returns, transfer pricing documentation, and other IRS requirements. The structure must be maintained properly to preserve its benefits. Foreign buyers should work with a U.S. tax advisor with international expertise before choosing an ownership structure.