LLC vs Personal Purchase — What's Best for a Foreign Buyer?

Introduction: A Decision That Changes Everything

One of the first questions international buyers ask before purchasing property in Florida is: should I buy in my personal name or through an LLC? It is a smart question because the ownership structure affects taxes, inheritance, privacy, legal liability, and available financing options.

There is no single right answer. What works for a Venezuelan investor buying a rental condo in Miami may not be correct for a Canadian citizen acquiring a second home in Fort Lauderdale. In this article, we break down each structure — personal purchase, Florida LLC, and land trust — so you can make an informed decision with your attorney and mortgage lender.

If you have not yet started the mortgage process, we recommend first reading our complete foreign national mortgage guide.

What Is a US LLC?

An LLC (Limited Liability Company) is a legal entity separate from its owners — called "members." In Florida, anyone can form an LLC, including non-resident foreigners. You do not need to be a US citizen or have a Social Security number to be a member of a Florida LLC.

Key characteristics of a Florida LLC:

• Asset separation: The property belongs to the LLC, not to you personally. This creates a legal barrier between the property and your personal assets.
• Tax flexibility: By default, a single-member LLC is treated as a "disregarded entity" by the IRS, meaning income and expenses flow directly to the member. It can also elect to be taxed as a partnership or corporation.
• Privacy: In Florida, LLC records do not automatically reveal who the members are. The true owner can remain relatively private.
• Formation cost: Registering an LLC in Florida costs $125 USD in state filing fees, plus attorney or registered agent fees (an additional $300–$800 on average for a simple LLC).
• Annual cost: The LLC must file an annual report with the State of Florida — the fee is $138.75 per year. It may also need to file additional federal tax returns.

An LLC is a powerful tool, but it is not free or automatically advantageous. It has formation costs, annual maintenance costs, and tax complexities that must be carefully considered.

Personal Name Purchase: Pros and Cons

Buying in your personal name is the simplest and most direct structure. The property title appears in your name (or the names of the buyers) directly.

Advantages of buying in personal name

• Broader financing access: Most foreign national mortgage lenders work with personal name purchases. Financing options are greater, interest rates may be lower, and documentation requirements are more standard.
• Lower upfront cost: No entity formation expenses or annual LLC maintenance.
• Faster process: The closing process is generally simpler without an entity involved.
• Capital gains exclusion: If the property is your primary residence, US residents can exclude up to $250,000 ($500,000 for married couples) of capital gains. However, non-resident foreigners generally do not qualify for this exclusion.

Disadvantages of buying in personal name

• Estate tax: This is the biggest risk for foreigners. Non-residents are subject to US federal estate tax on US-located assets exceeding just $60,000 USD. The rate can reach 40%. A $500,000 property in your personal name can generate a massive tax bill for your heirs.
• No liability protection: If someone is injured on your property and sues you, your personal assets (in the US and potentially in your home country) could be at risk.
• Probate: If you die owning real estate in Florida in your personal name, your heirs must go through Florida probate — a costly and public legal process that can take months or years.
• Less privacy: Your name appears in public property records, which are accessible to anyone in Florida.

Purchasing Through an LLC: Pros and Cons

Many international investors choose to structure their purchases through a Florida LLC, especially when the primary goal is investment rather than personal residence.

Advantages of buying through an LLC

• Estate tax protection: This is the primary advantage for foreigners. If the property belongs to the LLC (not to you personally), you technically own interests in an entity, not US real estate directly. This can significantly reduce estate tax exposure. However, the correct structure requires specialized legal advice — the IRS can "disregard" entities that lack real economic substance.
• Liability protection: If someone sues the LLC over an incident on the property, your personal assets are protected, as long as you have maintained separation between the LLC and your personal finances.
• Avoiding probate: LLC membership interests transfer much more easily than direct real estate. You can plan succession with more flexibility.
• Privacy: The property appears in the name of the LLC in public records. If the LLC is properly structured, your name does not easily appear in a public search.
• Ease for multiple owners: If several investors want to buy together, the LLC can have multiple members with defined ownership percentages.
• Expense deductions: Operating expenses of the property (maintenance, insurance, management) can be deducted from the income generated by the LLC.

Disadvantages of buying through an LLC

• More limited financing: This is the most practical obstacle. Most conventional lenders do not issue mortgages to LLCs. Lenders that do generally require the loan to be in the personal name of the guarantor (the LLC members) with the LLC as title holder, or use DSCR (Debt Service Coverage Ratio) or private/portfolio lender products. Rates can be 0.5%–1.5% higher.
• Additional costs: LLC formation ($125 state fee + legal fees), annual report ($138.75/year), possible need for an IRS EIN (Employer Identification Number), and more complex annual tax returns.
• Need to maintain separation: For liability protection to be effective, you must maintain separate bank accounts for the LLC, not commingle personal and LLC funds, and properly document transactions.
• FIRPTA still applies: The LLC does not eliminate FIRPTA obligations (see section below). If the LLC is owned by a non-resident foreigner, FIRPTA rules apply equally.

The Land Trust: A Third Option

There is a third, lesser-known but useful structure in Florida: the land trust. In a land trust, the property title is placed in the name of a trust, with the buyer as beneficiary.

Land trust advantages:

• Maximum privacy — the beneficiary's name does not appear in any public record
• Avoids probate just like an LLC
• Generally does not affect mortgage eligibility because the loan can be made in the personal name of the beneficiary

Land trust limitations:

• Does not offer liability protection like an LLC
• Does not resolve the estate tax problem for foreigners on its own
• Requires legal counsel to be properly structured

Some buyers combine a land trust with an LLC: the LLC is the beneficiary of the land trust, achieving privacy + liability protection + estate planning in a single structure. This combination is more expensive to set up but may be the most comprehensive solution for high-net-worth investors.

FIRPTA: Implications for Each Structure

FIRPTA (Foreign Investment in Real Property Tax Act) is a federal law requiring the buyer to withhold 15% of the sale price when a non-resident foreigner sells US real estate. This money is withheld and sent to the IRS as a tax prepayment.

FIRPTA on personal purchase

When you sell property held in your personal name, the buyer (or their title company) is required to withhold 15% of the sale price for the IRS. You can file a tax return and recover some or all of that money if your actual gain was lower, but the process can take several months.

FIRPTA on an LLC

If your LLC is a "foreign-person LLC" (meaning all members are non-resident foreigners), FIRPTA rules apply just like a personal purchase. The 15% withholding is still mandatory upon sale.

However, if the LLC has at least one member who is a US citizen or permanent resident with at least 50% ownership, the LLC may qualify as "domestic" and FIRPTA may not apply. This is a strategy some investors use, but it requires careful legal structuring.

Strategies to mitigate FIRPTA

• Request a "withholding certificate" from the IRS before closing to reduce withholding if the actual gain is less than 15% of the sale price
• File Form 8288-B to request a reduction in withholding
• Structure ownership with a US resident partner (with corresponding legal and tax considerations)
• Consult with a CPA specializing in international taxes before selling

Estate Planning: The Deciding Factor

For many foreign buyers, the US estate tax is the most determining factor in the structure decision. Here is the full picture:

• US residents and citizens: $13.61 million exemption (2024). For the vast majority, there is no problem.
• Non-resident foreigners: Exemption of only $60,000 on US-located assets. A $400,000 property in your personal name could generate an estate tax of up to $136,000 for your heirs.

A Florida LLC whose members are non-residents can, with the correct structure, convert US real estate into entity interests, which may be subject to different rules depending on the tax treaty between the US and your country of residence. Countries like Canada, Mexico, and several European countries have treaties with the US that can affect this analysis. Countries without a treaty — like many Latin American countries — have greater exposure.

Important: This area of tax law is complex and changes over time. Always consult with an attorney specializing in international estate planning before deciding on your structure. The wrong decision can cost your heirs hundreds of thousands of dollars.

Mortgages for LLC vs Personal Purchase: Which Lenders Allow Each?

From a financing perspective, personal name purchase remains the option with more choices and better terms for most foreign buyers.

Personal name mortgages for foreigners

• Available with several lenders specializing in foreign nationals
• Down payment: 25–35% depending on country of origin (see our down payment guide)
• Rates: generally between 7% and 9% (variable by market)
• Documentation: passport, visa (if applicable), bank statements, bank reference letter, home-country credit report

LLC mortgages

• Available primarily with DSCR loan lenders (loans based on property cash flow) or private/portfolio lenders
• Some lenders require the loan to be in the personal name of the guarantor (LLC members) with the LLC as title holder
• Down payment: generally 25–40%
• Rates: typically 0.5%–1.5% higher than equivalent personal loans
• Advantage: DSCR loans are qualified based on the property's rental income, not your personal income — this can be useful for buyers with hard-to-document income

For buyers from Colombia, Brazil, Argentina, and other Latin American countries, the foreign national mortgage program in personal name typically offers better terms than an LLC mortgage for the first purchase.

Comparison Table: LLC vs Personal Purchase

Factor	Personal Purchase	Florida LLC
Estate tax	High exposure (only $60K exemption for foreigners)	Potential reduction with correct structure
Liability protection	None — personal assets at risk	Yes — barrier between property and personal assets
Mortgage access	Broad — multiple specialized lenders	Limited — mainly DSCR and private lenders
Mortgage interest rate	Generally lower	0.5%–1.5% higher
Privacy	Your name in public records	LLC name in records (more private)
Probate	Required in Florida — costly and public	More flexible — membership interests transfer
FIRPTA on sale	15% mandatory withholding	15% if all members are foreign
Upfront cost	No additional cost	$125 + legal fees ($300–$800)
Annual cost	None	$138.75/year (annual report) + accounting
Expense deductions	Deductible on Schedule E	Deductible through the LLC
Tax complexity	Moderate	High — requires specialized accountant

When Does an LLC Make Sense? When Is Personal Better?

An LLC makes more sense when:

• The property value exceeds $300,000 and you have no tax treaty with the US that protects your estate
• You plan to own multiple US properties and want cross-liability protection
• The property will primarily be a rental investment (not personal residence)
• Your total US assets exceed $60,000 and you want estate planning
• You value privacy and do not want your name in public records
• You have investment partners and need a clear shared ownership structure

Personal name purchase makes more sense when:

• It is your first US purchase and you want the simplest, most accessible mortgage option
• The property value is low and LLC formation costs do not justify the benefit
• You have US legal residence (permanent residency or certain visa types) and the LLC tax benefits are smaller for you
• You want to access the best foreign national mortgage programs with the lowest possible rate
• You live in a country with a US tax treaty that already protects your estate
• The purpose is personal use (vacation second home) rather than investment

Practical Steps to Choose the Right Structure

1. Consult with an attorney specializing in international estate planning before making any decision. The estate tax analysis is specific to your country of residence and personal situation.
2. Speak with a CPA experienced in international taxes (with experience in FIRPTA and tax treaties). Many buyers miss legitimate deductions by not having the right advisor.
3. Talk with your mortgage lender about financing options for each structure before deciding. Sometimes the "ideal" structure from a legal standpoint is not viable from a financing standpoint.
4. Properly document your LLC: Operating agreement, separate bank account, IRS EIN. A poorly maintained LLC offers no real protection.
5. Review the structure periodically: Tax laws change. What is optimal today may not be in five years.

Conclusion

The LLC vs personal purchase question has no universal answer. For buyers seeking simple financing and making their first purchase, personal name typically offers the most direct path. For investors with multiple properties, significant assets, or no US tax treaty, a well-structured LLC can be the difference between protecting your family's wealth and an unexpected tax bill for your heirs.

What is clear is that this decision deserves time, specialized advice, and an open conversation with your professional team — legal, tax, and financing.

At Home Financial Group, we work with international buyers from more than 60 countries and understand the complexities of financing properties both in personal name and through entities. If you have questions about how ownership structure affects your mortgage options, call us at (954) 663-3619 or visit global.homefg.com.

Medardo F. Cevallos, NMLS# 305965 — Home Financial Group LLC, NMLS# 305389 — Oakland Park, FL. This article is for informational purposes only and does not constitute legal or tax advice. Always consult qualified professionals before making investment structure decisions.