LLC vs Personal Name: How Foreign Nationals Should Hold US Investment Property

Key Takeaways:

1. The choice between LLC and personal ownership depends on your financing strategy, tax exposure, and long-term investment goals.

2. An LLC provides liability protection and flexibility, while personal ownership offers simplicity and lower upfront costs.

3. For foreign investors, financing structure (especially mortgage type) often determines whether an LLC is the better option.

4. As your portfolio grows, using multiple LLCs or a holding structure helps manage risk and scale more effectively

Every foreign investor buying property in the US faces the same question before closing: should you hold the property in your personal name or through an LLC? The answer depends on three things: your financing strategy, your tax exposure, and your long-term investment plan.

Foreign investment in US real estate continues to grow. According to the National Association of Realtors, international buyers purchased over $56 billion worth of US residential property between April 2024 and March 2025. As more foreign investors enter the market, structuring ownership correctly becomes critical because it directly affects liability, taxes, and financing options from the start.

In our experience, the ownership structure is the decision foreign investors regret not thinking through early, not the property itself. Choosing between an LLC and personal ownership impacts everything from loan eligibility to liability protection and exit strategy.

This guide breaks down how each option works, where each makes sense, and how to decide the right structure based on your investment goals.

What Does It Mean to Hold Property in an LLC vs Your Personal Name?

Before deciding which structure is better, start with a clear view of each. The difference is not just legal ownership, it affects how the property is taxed, financed, and managed.

Holding in Your Personal Name

When you purchase property in your personal name, you are the direct legal owner of the asset. This is the simplest structure and is commonly used for first-time investors.

From a tax perspective, the property’s income and expenses are reported directly under your name. For foreign nationals, this typically means filing US tax returns tied to rental income generated from the property.

The main advantage here is simplicity. There is no separate entity to manage, and financing is often more straightforward since lenders are underwriting you as the borrower.

Holding Through a US LLC

When you hold property through a US LLC, the LLC becomes the legal owner of the property, not you personally. You own the LLC, and the LLC owns the asset.

For foreign nationals, a single-member LLC is typically treated as a foreign disregarded entity (FDE) for US federal tax purposes. This means the IRS does not treat the LLC as a separate taxpayer by default. Instead, the income still flows through to you personally.

The distinction here is that an LLC does not always create a separate tax identity. It depends on how many members the LLC has and whether an election has been made using Form 8832.

This matters because while an LLC can provide liability protection and structural flexibility, it may not automatically change how you are taxed unless the entity is structured differently.

In simple terms, holding in your personal name means direct ownership, while holding through an LLC adds a legal layer between you and the property. The right choice depends on how you want to balance simplicity, protection, and long-term investment strategy.

Side-by-Side Comparison: LLC vs Personal Name for Foreign Investors

Choosing between an LLC and personal ownership comes down to how each structure impacts risk, financing, taxes, and long-term flexibility. Here’s a clear comparison across the key factors that matter most to foreign investors:

To be clear, neither structure is universally better. The right choice depends on your financing method, home country tax treaty status, and whether you’re buying a single property or building a portfolio.

Can Foreign Nationals Get a Mortgage Through an LLC?

Yes, foreign nationals can get a mortgage through an LLC, but the structure of the loan matters.

At HomeAbroad, DSCR loans are commonly issued to US-based LLCs owned by foreign nationals, allowing investors to hold property through an entity while still qualifying for financing. This structure aligns well with investors who want liability protection and a scalable portfolio approach.

The key point here is that even when the loan is issued to an LLC, lenders still evaluate the underlying ownership and deal structure. This may include reviewing the investor’s background, the LLC structure, and how the property performs financially.

Jason Saylor

Sr. Customer Loan Specialist, HomeAbroad | NMLS# 2594493

“Most foreign investors assume they need to buy in their personal name to qualify for a mortgage. That’s not how DSCR loans work. We’ve closed loans for LLC-owned properties where the borrower had no US credit history and no W-2 the deal qualified entirely on the property’s rent-to-debt ratio.”

Using an LLC for financing works best when the deal is structured from the beginning with that goal in mind. Trying to transfer ownership after closing can create unnecessary complexity.

For foreign investors focused on long-term growth, holding property in an LLC while using a DSCR loan is often the most practical approach.

When Should Foreign Investors Use an LLC?

An LLC is typically the right choice when your investment strategy goes beyond a single property and starts to focus on risk management, scalability, and long-term structuring.

In our experience, foreign investors benefit most from using an LLC when they are building a portfolio rather than making a one-off purchase. Holding multiple properties under an entity makes it easier to manage ownership, separate liabilities, and streamline future acquisitions.

An LLC also makes sense when liability protection is a priority. Since the property is owned by the entity and not you personally, it creates a legal separation that helps protect your personal assets from property-related risks.

Another common scenario is when investors want flexibility in ownership and exit strategy. With an LLC, it’s easier to add partners, transfer ownership, or structure deals differently over time without directly changing property titles.

The reason this matters from a financing standpoint is that DSCR loans underwrite the property’s income, not your personal profile. Holding multiple properties in a single LLC without separation can create documentation complexity when applying for loans on subsequent acquisitions lenders want clean, property-level income statements.

Jason Saylor

Sr. Customer Loan Specialist, HomeAbroad | NMLS# 2594493

“The question we hear most from investors on their second or third deal is ‘should I have done this from the beginning?’ The answer is usually yes. Restructuring after you’ve already financed and titled properties adds legal and lender complexity that’s avoidable.”

In short, an LLC is most useful when you’re treating real estate as a long-term investment strategy rather than a single transaction.

When Buying in Personal Name Makes More Sense

Most guidance leans heavily toward LLCs, but there are situations where buying in your personal name can be a practical choice, especially when simplicity and speed matter more than long-term structuring.

One common scenario is an all-cash purchase of a single property, particularly in a stable, low-risk market. Without financing involved, the need for an entity structure is reduced, and personal ownership can simplify the transaction.

It can also make sense for investors from countries with a strong US tax treaty, where the tax treatment may already be favorable depending on how income is reported. In these cases, adding an LLC may not provide immediate benefits.

Another situation is a short-term investment or flip, where the holding period is limited. If the plan is to exit quickly, the cost and compliance requirements of maintaining an LLC may outweigh its advantages.

Personal ownership may also be considered if the investor is not yet structuring deals around DSCR financing or is still in the early stages of entering the US market.

That said, this approach has clear limitations.

Jason Saylor

Sr. Customer Loan Specialist, HomeAbroad | NMLS# 2594493

“This won’t work well if you’re planning to finance, hold long-term, or own multiple properties. The liability and estate tax exposure adds up quickly. But for a single all-cash purchase with a clear exit plan, personal ownership is worth evaluating.”

In short, buying in your personal name can work in specific, limited scenarios, but it becomes less effective as your investment strategy expands.

Legal and Tax Considerations for Foreign Investors

Before choosing how to hold US real estate, you need to consider how each structure is treated from a tax and compliance standpoint. The details can vary based on your ownership structure, country of residence, and how the entity is set up.

This section provides general guidance based on common scenarios. For specific structuring decisions, We recommend working with a qualified cross-border tax professional.

Rental Income Tax: Personal Name vs LLC

Regardless of structure, rental income from US property is subject to US taxation.

• Personal Name: Foreign investors typically file as a non-resident alien (NRA) using Form 1040-NR, reporting rental income and expenses directly.
• Single-Member LLC (Foreign-Owned): Treated as a disregarded entity for tax purposes, meaning income flows through to the owner. However, it must still file Form 5472 along with a proforma Form 1120 annually, even if no tax is owed at the entity level.
• Multi-Member LLC: Usually taxed as a partnership, which introduces different reporting and withholding requirements, including partnership-level filings and allocations.

The distinction here is that an LLC does not automatically change how income is taxed. The tax treatment depends on the number of owners and how the entity is classified.

FIRPTA: What It Is and How Structure Affects Withholding

FIRPTA (Foreign Investment in Real Property Tax Act) requires that when a foreign person sells US real estate, the buyer must withhold 15% of the sale price and remit it to the IRS.

For foreign investors:

• If the property is held in a personal name, FIRPTA applies directly.
• If held through a single-member LLC owned by a foreign individual, FIRPTA still applies because the IRS treats the owner as the seller, not the LLC.
• If held through a multi-member LLC (partnership structure), FIRPTA withholding does not apply at the same level, but other partnership-related withholding rules may apply.

The honest answer is that an LLC alone does not eliminate FIRPTA exposure. The structure has to be designed with that goal in mind, which usually requires coordination with a US tax advisor.

Estate Tax: The Often-Overlooked Risk

Estate tax is one of the most overlooked risks for foreign investors.

• Foreign nationals have only a $60,000 US estate tax exemption, compared to over $15 million for US residents.
• US real estate held directly in a personal name is considered a US-situs asset, making it subject to US estate tax.

In some cases, investors use layered structures such as a foreign corporation owning a US LLC to change how the asset is classified for estate tax purposes. This can help reduce exposure, but it adds complexity and requires proper planning.

Because of the impact and complexity, this is an area where working with a cross-border estate planning attorney is strongly recommended.

Annual Compliance Requirements by Structure

Each ownership structure comes with different reporting obligations:

• Personal Name: File Form 1040-NR annually
• Single-Member Foreign-Owned LLC: File Form 5472 + proforma Form 1120
• Multi-Member LLC: File Form 1065, along with K-1s for each partner

These requirements are not optional. Missing filings can result in penalties, even if no tax is owed.

Which State Should You Form Your LLC In?               

This is one of the most common questions foreign investors ask, and the answer is often oversimplified. The right state depends on your priorities cost, privacy, legal protection, and where your property is located.

Property State (Where You Are Investing)

In most cases, the simplest approach is to form your LLC in the same state where the property is located.

This helps:

• Avoid additional registration requirements
• Reduce ongoing compliance costs
• Keep the structure straightforward for financing and management

For many foreign investors, this is the most practical option, especially when starting with a single property.

Wyoming

Wyoming is widely preferred for its strong asset protection laws, including charging order protection, which can limit how creditors access LLC assets.

It also offers:

• Low setup and annual costs
• No state income tax
• High privacy (owners are not publicly listed)

For investors focused on privacy and cost efficiency, Wyoming is often a strong option.

Delaware

Delaware is known for its well-established legal system and is commonly used for entity structuring, especially in more complex ownership setups.

Key benefits include:

• Strong legal framework
• Flexible management structures
• Privacy advantages in ownership disclosure

It’s often chosen when investors want a recognized and legally robust entity structure, especially for partnerships or multi-entity setups.

Florida

Florida is a popular choice primarily because of high investor activity and familiarity, especially for those actively investing in the state.

Advantages include:

• Simpler compliance if your property is located in Florida
• No need for foreign entity registration if the LLC is formed in-state
• Familiar processes for lenders and service providers

For investors buying property in Florida, forming an LLC in the same state can often reduce complexity.

Key Consideration

One important rule many investors overlook is that if you form an LLC in a different state from where your property is located, you will likely need to register it as a foreign entity in the property’s state.

This adds:

• Additional filing requirements
• Extra annual fees
• Ongoing compliance in multiple states

Jason Saylor

Sr. Customer Loan Specialist, HomeAbroad | NMLS# 2594493

“What we see often is investors forming a Wyoming LLC for the privacy benefits, but then needing to foreign-qualify it in Florida or Texas where the property sits. That adds another $300–$800/year per state in registration and agent fees.”

In practice, the decision comes down to balancing privacy, cost, and operational simplicity. For many investors, forming an LLC in the same state as the property is the simplest path, while others may prioritize privacy and choose states like Wyoming with a more layered structure.

One LLC or Multiple LLCs: Portfolio Planning for Foreign Investors

As your portfolio grows, the question shifts from how to hold one property to how to structure multiple properties efficiently. The right setup depends on how many assets you plan to own and how you want to manage risk.

When One LLC Works

A single LLC can work well if you are:

• Starting with one property
• Testing a new market
• Keeping your structure simple in the early stage

This approach is easier to manage and keeps costs lower, especially when you are not yet scaling.

Why Multiple LLCs Are Often Preferred

While it is possible to hold multiple properties under one LLC, it is generally not recommended for growing portfolios.

The reason is risk aggregation. If multiple properties are held under a single LLC and one property faces a legal or financial issue, the liability can extend to all assets within that entity.

Using separate LLCs for each property helps:

• Isolate risk to individual assets
• Protect the rest of your portfolio
• Maintain cleaner ownership and exit strategies

What Is a Series LLC?

A Series LLC is a structure available in certain states that allows multiple “series” or sub-entities to exist under one parent LLC.

Each series can hold a separate property and, in theory, maintain its own liability protection. This can reduce setup and maintenance costs compared to forming multiple standalone LLCs.

However, not all states recognize Series LLC structures, and lenders may have specific requirements, so this option needs to be evaluated carefully.

A More Scalable Approach: Holding Structure

As portfolios grow, many investors move toward a holding company structure, where a parent entity owns multiple property-level LLCs.

Jason Saylor

Sr. Customer Loan Specialist, HomeAbroad | NMLS# 2594493

“When we work with investors building a multi-property portfolio, we typically recommend a holding company structure over a single LLC. It adds a layer of separation that becomes important if one property runs into a legal or financial issue.”

This structure allows you to:

• Keep liability separated at the property level
• Maintain centralized control through the holding entity
• Scale more efficiently over time

One LLC may be enough to start, but as you add more properties, structuring each asset separately becomes a key part of protecting and scaling your investment portfolio.

Common Mistakes Foreign Investors Make with Property Ownership Structure

Choosing the right ownership structure is not just about setting up an LLC or buying in your personal name. The real risk comes from how the structure is implemented and managed over time. Based on our experience, these are the most common mistakes that can create issues later.

1. Assuming an LLC Eliminates FIRPTA

One of the biggest misconceptions is that holding property through an LLC avoids FIRPTA withholding.

In reality, for a single-member LLC owned by a foreign individual, FIRPTA still applies because the IRS treats the individual as the seller. The structure alone does not eliminate withholding obligations.

2. Forming an LLC in the Wrong State

Many investors default to states like Wyoming or Delaware for privacy or cost benefits, without considering where the property is located.

If the LLC is formed in a different state, you will likely need to register it as a foreign entity, which adds:

• Extra costs
• Additional compliance
• Ongoing filings in multiple states

3. Mixing Personal and LLC Finances

Using the same bank account for personal and LLC transactions is a common mistake.

This can lead to “piercing the corporate veil,” where courts may disregard the LLC’s legal protection if the entity is not treated as separate from the owner.

Jason Saylor

Sr. Customer Loan Specialist, HomeAbroad | NMLS# 2594493

“Here’s what actually happens when investors skip the operating agreement: the LLC’s liability protection can be challenged in court. We’ve seen this derail otherwise well-structured deals.”

4. Ignoring Form 5472 Compliance

For foreign-owned single-member LLCs, Form 5472 filing is mandatory, even if the LLC has no taxable income.

Failure to file can result in penalties starting at $25,000, which is one of the most overlooked risks for foreign investors.

5. Transferring Property to an LLC Without Lender Approval

Some investors purchase property in their personal name and later transfer it into an LLC.

If the property is financed, this can trigger a due-on-sale clause, meaning the lender may require the loan to be repaid or restructured. This step should always be planned before closing, not after.

Avoiding these mistakes is less about complexity and more about getting the structure right from the beginning and maintaining it properly over time.

How to Set Up an LLC as a Foreign National

Setting up an LLC as a foreign national is straightforward when approached step by step. The key is to ensure the structure is aligned with your investment and financing strategy from the beginning.

1. Choose the State for Your LLC

Select the state where you want to form your LLC. In most cases, this is the same state where the property is located to avoid additional registration and compliance requirements.

2. Register Your LLC

File the Articles of Organization with the chosen state. This officially creates your LLC as a legal entity.

3. Appoint a Registered Agent

You’ll need a US-based registered agent with a physical address in the state of formation. This agent receives legal and official documents on behalf of your LLC.

4. Get an EIN (Employer Identification Number)

Foreign nationals must obtain an EIN from the IRS to open a bank account and handle tax filings. This can be done without a Social Security Number.

5. Open a US Bank Account

A US bank account is essential to:

• Keep LLC finances separate
• Receive rental income
• Pay expenses and manage cash flow properly

6. Create an Operating Agreement

Even if not required by the state, an operating agreement is critical. It defines ownership, management structure, and how the LLC operates, which helps maintain liability protection.

7. Stay Compliant with Ongoing Requirements

Depending on your structure, this may include:

• Annual state filings
• IRS forms such as Form 5472 and proforma 1120
• Maintaining proper financial records

Based on the loans we’ve closed for foreign investors, most foreign nationals can complete LLC formation and EIN registration within 1–2 weeks. The step that takes longest is usually US bank account opening, which varies by institution. We’ve helped clients get through the entire setup process before their property closes.

LLC vs Personal Name: Final Thoughts

Choosing between an LLC and personal ownership is not about picking a “better” option, it’s about selecting the structure that aligns with your financing approach, risk tolerance, and long-term investment strategy.

For most foreign investors planning to finance, scale, or hold property long term, an LLC offers clearer advantages in terms of liability protection, flexibility, and structured growth. On the other hand, personal ownership can still make sense in specific scenarios, such as a single all-cash purchase with a defined short-term plan.

Understanding how each structure affects tax exposure, financing eligibility, and compliance requirements is critical before you close on a property. Getting this decision right early can prevent costly restructuring later.

At HomeAbroad, we go beyond structuring. We offer foreign national mortgage solutions tailored for foreign nationals, allowing you to qualify without relying on US credit history. Along with financing, we also assist with LLC setup and US bank account opening so your investment is aligned from day one.

Get started with HomeAbroad today and structure your investment the right way from the beginning.

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About the author:

Jason Saylor, a licensed Mortgage Loan Originator (NMLS# 2594493), is a Senior Customer Loan Specialist at HomeAbroad. He specializes in mortgage solutions and guiding clients through strategic real estate investments.

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