When buying a house in the United States, many people are confused about whether to buy it in the name of the couple, in the name of their children, or in joint names. So how should they choose? Let us analyze for you whose name is better to be written on the real estate certificate in the United States?
Whose name is better to be written on the real estate certificate in the United States?
Before deciding whose name is written on the real estate certificate, we must first Consider three aspects, namely: asset protection, tax deduction, and smooth inheritance.
Asset protection: Asset protection is particularly important for some high-risk careers and those who consider the risks of their children’s marriage. For example, if you are a doctor and for some reason someone files a lawsuit against you, or your marriage changes, etc.
Tax deductions: Different names of property rights may lead to different tax issues. When it comes to property investment, the main considerations are income tax, capital gains tax and property tax. On the premise of complying with the provisions of tax laws, reasonably reducing taxes is what every investor must pursue.
Smooth inheritance: Real estate investment uses a real estate investment portfolio as a tool to use time to get rich. Therefore, it is a need to inherit the real estate in the future without causing additional tax problems and other costs during the inheritance process. issues to consider.
Buy it under your own name
If you buy a house in the United States under your own name, the ownership is yours.
Many people will choose this method. Because it is simple and low-cost, the advantage of this approach is that you will have greater control over your property. But at the same time, since the ownership belongs to you personally, if you encounter any lawsuit personally, such as a tenant who is injured in your house and sues you, etc., or your profession causes you to be sued, such as a doctor, etc., then everything in your name will Other properties will be exposed to this lawsuit and bear joint and several liability.
If the property is purchased under an individual’s name, the control rights also belong to the individual, so you can decide on your own regarding the sale, lease, etc. of the house. But when you pass ownership to your children, inheritance taxes and so on will also be involved.
Joint purchase
There are two forms of joint tenancy, one is Joint tenancy (available in joint ventures), and the other is Tenancy in common (available in common parties).
The biggest difference between the two is that after the death of one party in a joint union, the property rights will be automatically transferred to the other party; but not in a general union. When one party dies, the property rights will be transferred to the other party. The family of the deceased. Therefore, generally speaking, the relationship between husband and wife or family members will be registered with a joint certificate, while the partners who are not in a relationship between husband and wife will be registered with a general certificate.
The assets under joint names are in the names of two (or several) different people, so the assets are also owned by these individuals. If an individual encounters legal problems, they can be traced back to this property and there is no asset protection. The proportion of ownership is indicated on the property right. The exercise and distribution of ownership are based on this ratio, and the income is also distributed according to the proportion of ownership.
Buy under the name of the company
Many people buy their houses under the name of the company, even former US President Obama is no exception. After Obama retired from the presidency, he bought the villa he had rented before. His wife's name was not written on the property certificate, nor his mother's name was written on the property certificate. He used a company controlled by himself as the landlord. It's one of many tax-saving tricks he can do.
The assets under the company's name are controlled by the company, and the company is controlled by directors (equity holders) or investment partners. However, once the real estate is placed in the name of the company, the house purchased under the company's name belongs to the company, and all the income from the house also belongs to the company. Since the company is generally a limited liability company, the assets in the company's name have certain protection. That is to say, if there is a lawsuit or other issues related to the property or business of the company, the assets within the company can only be traced at most, and it will not go beyond the scope of the company.
The inheritance of a company requires filling out a form to declare and change shareholders and directors. Since a company is a legal and tax entity with its own tax rate, the profits and losses of the house are the profits and losses attributed to the company. The net rental income of the house and the capital appreciation income of the house are taxed according to the corporate income tax rate.
Family Trust
Do you still remember the legendary woman Wendi Deng? Then you will definitely not forget her marriage to the media tycoon Rupert Murdoch. When they divorced, the world was speculating that Wendi Deng would divide at least half of Murdoch's net worth this time. However, what is surprising is that Murdoch "sent away" Wendi Deng with two properties and making his two daughters the beneficiaries of an $8.7 million fund. After the divorce, he still had a net worth of $13.9 billion.
Trust is a business tool commonly used by wealthy Americans, and family trust is a form commonly used by families. The ownership of the assets purchased under the trust does not belong to the individual or the company, but only to the trust itself. However, the trust itself is not a commercial entity or a business entity in the legal sense. It will not accept any legal proceedings, so the trust within it Assets will be well protected.
The entire operation and distribution of the trust is controlled by the trust management controller, so the purpose of inheritance can be achieved as long as the controller is replaced.
Income from the assets in the trust belongs to the trust itself. Although the trust needs to file a tax return, the trust is not a tax entity and has no tax rate. The income in the trust is only temporarily there and will be distributed to the trust's beneficiaries at the end of the year. However, when the beneficiary receives income from the trust, plus the beneficiary's other income, it needs to be taxed according to the personal income tax method. For people who have a lot of real estate and business assets in the trust, the trust is a good tool to avoid taxes.
Trust is a typical business form with separation of powers. It has great benefits for asset protection and reasonable tax avoidance of high returns. Since the property is actually in the name of the person who controls the trust, passing it on will cause expense and hassle if the person who controls the trust is an individual.
If parents want to give property to their children, they must take a long-term approach. In general, since everyone’s real estate investment situation is different, it is still necessary to carefully consider according to personal circumstances. If the property value is less than 10 million US dollars and you want to achieve the best tax saving effect, inheritance is the most time-saving, labor-saving and tax-saving method. But if the property value is higher than 10 million US dollars, it is recommended to use a trust.