LLC (Limited Liability Company)
An LLC is a pass-through legal entity commonly used to own commercial real estate — it provides liability protection to members while allowing income and losses to flow through to owners' personal tax returns.
What it means
LLCs are the default CRE ownership structure in the U.S. They combine the liability protection of a corporation with the pass-through taxation of a partnership. Each property is typically held in its own single-asset LLC to isolate liability.
Member interests in an LLC are partnership interests for tax purposes — they are not real property and do not qualify for 1031 exchange directly. To exchange a property held in an LLC, the LLC itself exchanges (common when single-member), or a drop-and-swap converts to TIC.
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