Buying Property in the USA Through an LLC: Liability, Taxes, Heirs

Many buyers from Europe only think about whose name goes on the purchase contract when the realtor fills in the form. Yet that choice decides three things that are costly to change later: who is liable if something happens on the property, who files and pays taxes in the US, and what falls into the American estate when you die. Here are the four routes side by side, with what the law actually says about each.

1Four wrappers for one house

If you're a European buying property in the USA, you essentially have four options. You buy it yourself, with your name on the purchase contract. You form an LLC that buys the property and belongs to you. You form a US C Corporation that buys it. Or the corporation belongs not to you but to a holding company outside the USA whose shares you hold; this structure is called a US blocker. The overview The ideal legal structure for US real estate presents the options and their tax consequences. This article goes deeper on the three points buyers most often misjudge: what the LLC really does for liability, how much privacy is left and how the IRS treats each wrapper.

First, a distinction that clears up a lot of confusion. Company law and tax law see the same LLC differently. Under state law it is a separate person that signs contracts, owns property and is liable. For the IRS, a single-member LLC does not exist for tax purposes; it is disregarded as a disregarded entity (26 CFR § 301.7701-3(b)(1)(ii)). Both are true at the same time, and almost everything else follows from that.

2Liability: what the LLC separates and what it doesn't

If you hold the property yourself, everything you own is on the line. If a tenant slips on the stairs, they sue you, and their judgment can reach all your assets, not just the house. For a rental property, that is the strongest reason to use a company.

This is where the LLC draws a line. In Texas, a member or manager is not liable for the debts, obligations or liabilities of the LLC, including those under a judgment, unless the company agreement says otherwise (Business Organizations Code § 101,114). Florida puts it just as clearly: the LLC's debt is solely the company's debt (§ 605.0304). A tenant who sues is suing the LLC, and can only reach what the LLC owns.

The line also works the other way, and that's where states differ. If a creditor has a judgment against you personally, in Texas they can reach your LLC interest only through a charging order: they receive the distributions the LLC would pay you, but neither the house nor the voting rights. The statute expressly calls the charging order the exclusive remedy (§ 101,112(d)). Florida makes an important exception for single-member LLCs. If the creditor shows the court that distributions will not satisfy the judgment within a reasonable time, the court can order the interest sold (§ 605.0503(4)). So if you own a Florida LLC alone, you are less protected from your personal creditors than in Texas.

Two things still belong in the picture. The company does not replace liability insurance on the house. And day to day it should be run as the separate person it legally is: its own bank account, leases in its name, rent paid into its account. Mix company and private life, and you make it hard for yourself to prove the separation later.

3Privacy, a sober look

If you buy yourself, your name appears with the deed in the county's public records. If an LLC buys, its name appears there. That's as far as it goes, and it pays to be clear about the limit.

The IRS knows who the owner is. A disregarded LLC wholly owned by a foreign person is treated as a domestic corporation for the § 6038A reporting requirement (26 CFR § 1.6038A-1(c)(1)). It needs an EIN, files Form 5472 every year along with a pro forma Form 1120, and names you as the owner. Miss it and you risk a penalty of $25,000 for each year (§ 6038A(d)). Form 5472 explains what the return looks like.

With FinCEN, things have become simpler. Under a final FinCEN rule, US companies are exempt from reporting their beneficial owners. The rule requiring companies to report all-cash purchases of residential property was struck down by a federal court in Texas on March 19, 2026; FinCEN has appealed. The title company will still want to see who owns the LLC and who signs for it at closing. So privacy means your name is not in the public records. It does not mean nobody knows who owns the house.

4The LLC and tax: like owning personally, plus one form

Because the IRS disregards a single-member LLC, it taxes you as if you had bought the property yourself. You report the rent on Form 1040-NR, make the § 871(d) election so that only the profit is taxed, and you need an ITIN for that. The details are in Taxes on US real estate.

The same applies when you sell. The FIRPTA regulations state expressly that a disregarded entity is not the seller; the owner is, and because you are a foreign person, the buyer withholds 15 percent (26 CFR § 1.1445-2(b)(2)(iii)). If the LLC has two or more members, it is a partnership for tax purposes. The LLC itself then withholds at the highest tax rate on the foreign members' share of the profit (§ 1446), and the company also files Form 1065.

There is no such thing as an LLC that stays tax-free in the US for a property located there. Rent from American real estate is US-source income, and gain on a sale is always treated as income from a US trade or business under § 897(a). If you're looking for an LLC for a business that operates outside the USA with no permanent establishment there, you'll find it on our sister site zerotax.llc. For property, it's not the right tool.

5The US corporation: its own tax, its own return

If a US C Corporation buys, the corporation is the US taxpayer, not you. It files Form 1120 every year and pays 21 percent federal tax on its profit (§ 11(b)), sale gains included; a corporation gets no lower rate for capital gains. Depending on location, state tax comes on top; Florida, for example, levies corporate income tax even though it charges individuals no income tax. You yourself file no US return for the rent.

The price comes at distribution. Dividends paid to you as a private individual abroad are taxed at 30 percent under § 871(a); tax treaties often reduce that, in many cases to no more than 15 percent. Taking profits out of a US corporation explains when and how a corporation's profits reach you.

The corporation has two advantages over buying personally: when it sells the property, it is domestic, so the 15 percent FIRPTA withholding does not apply. Its shares, however, remain US real property interests as long as real estate makes up at least half of its assets (§ 897(c)(2)); sell the shares instead of the house and you are back under FIRPTA. And the drawback that puts off most European buyers: shares in a US corporation are part of the US estate under § 2104(a). The corporation alone does not solve the problem for your heirs.

6A corporation under a foreign holding: the US blocker

This is exactly where the blocker structure comes in. The US corporation isn't owned by you but by a company outside the US, and you hold that company's shares. Under § 2104(a), shares count toward the US estate only if they were issued by a domestic corporation. So what you leave behind is a stake in a foreign company, not an American one.

We use a UK limited company for this, because the US-UK treaty cuts withholding tax on dividends to a holding with at least 10 percent of the voting rights to 5 percent, and to zero if further conditions are met. Whether the holding qualifies for these benefits depends on the treaty's anti-abuse clause, which has to be checked before formation. The structure is not a zero-tax solution: the corporation pays US tax on rents and sale gains.

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7Choose the structure before you make an offer

Many buyers want to buy first and sort out the structure later. That's the most expensive route. The buyer is named in the purchase contract, the title commitment and the deed, and any later change is a new transfer with its own consequences.

If you bought with a loan, things get tricky. Many mortgages contain a due-on-sale clause that lets the lender call the loan if the house changes owners. Federal law exempts certain transfers, such as to a spouse or children, on death, or into a trust in which you remain a beneficiary (12 U.S.C. § 1701j-3(d)). A transfer to your own LLC is not on that list. For tax purposes, the change can count as a sale, with every question a sale raises. And a corporation added years later changes nothing about what ran in your name up to then.

That's why the work starts before the first offer. The company has to exist, have an EIN and hold a bank account before the earnest money is paid; the steps through closing are set out in Buying real estate in the USA: the process. If you're financing, check with the lender first whether it lends to a company; more on that in Real estate financing in the USA as a foreigner.

8And when you die?

The estate is where the four routes differ most, and where buyers from Europe are most often caught off guard. Against US estate tax, a decedent without US residence gets only a credit of $13,000 (§ 2102(b)). How the numbers work out with a property, an LLC or a corporation, and how estate tax treaties apply, is covered in US estate tax for foreign owners.

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In short

• An LLC separates liability: members aren't liable for its debts. In Florida, though, a creditor can force the sale of the interest in a single-member LLC.
• For US tax purposes, a single-member LLC is invisible. You report the rent yourself, FIRPTA applies to you when you sell, and the LLC also has to file Form 5472.
• A US corporation pays 21 percent and distributes with withholding tax. Its shares are part of the US estate.
• A corporation under a foreign holding targets the estate: shares in a foreign company don't count as US assets. Inheritance tax at home still applies.
• Choose the structure before you make an offer. Changing it later can make the loan due.

How we help you

• US blocker for real estateBuying US property through a US C Corporation with a UK holding company.
• Form a CorporationThe US corporation (Inc) for growth, investors and your visa.
• Form an LLCThe US LLC with a permanent establishment, turnkey in six states.
• Corporation tax returnForm 1120 and Form 5472 for your US corporation.