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Transferring Real Property into Limited Liability Companies in Florida: Benefits and Considerations

Real Property, Probate and Trust Law

Transferring real property into a limited liability company (LLC) is a popular choice among property owners. This is because LLCs offer several advantages, including liability protection, estate-planning opportunities, and the potential for probate avoidance. However, before transferring Florida real property into an LLC, there are several considerations that property owners must keep in mind. This article provides an overview of the benefits of transferring real property into LLCs, as well as the issues that property owners should consider prior to transferring real property into an LLC.

Benefits of Using a Florida LLC for Asset Ownership

Liability Protection — Under Florida law, the debt, obligation, or other liability of a limited liability company is solely the debt, obligation, or other liability of the LLC. Members and managers are not personally liable, directly or indirectly, for a debt, obligation, or other liability of the LLC.[1] Therefore, if a liability arises from real property owned by an LLC, only the assets owned by the LLC (and not the personal assets of the members of the LLC) are exposed, provided proper entity formalities are maintained, as discussed below.

Creditor Remedy Limitation for Multimember LLCs — For multimember LLCs, a charging order is the sole and exclusive remedy by which a judgment creditor of a member may satisfy a judgment from the judgment debtor’s interest in the LLC.[2] A judgment creditor of a debtor member may not foreclose on the debtor member’s membership interest in the LLC. Moreover, the charging order limits the judgment creditor’s recovery against the LLC interest to only those distributions actually made to the debtor member. However, for single-member LLCs, the charging order is not the exclusive remedy, and a judgment creditor may be able to foreclose on the debtor member’s membership interest.[3]

Federal Tax Status Flexibility — The number of members determines the default LLC tax classification. If an LLC has only one member, the LLC’s default tax classification is that of a disregarded entity for federal tax purposes.[4] This means that the LLC does not need to obtain its own employer identification number (EIN) or file a separate tax return.[5] Where spouses are the only owners of the LLC and have community property ownership under the law of a state, despite having two members, the LLC may still be considered a disregarded entity.[6] Otherwise, outside of spouses with community property ownership, where an LLC has two or more members, the LLC’s default classification is partnership taxation.[7] If the LLC is taxed as a partnership, then the LLC will need an EIN and to file a separate annual partnership tax return. Interestingly, the IRS has not provided guidance on whether a Florida LLC owned solely by spouses as “tenants by the entirety” may be treated as a disregarded entity and not a partnership by default.[8] Regardless of the default tax classification options, members may elect that an LLC be taxed as a C corporation or an S corporation by filing a Form 2553 with the Internal Revenue Service.

Tenants by the Entirety Ownership — Tenants by the entirety (TBE) in Florida is a unique form of ownership in which married couples are treated as one marital unit (instead of two separate individuals).[9] When property is owned as TBE, both spouses are required to agree to any transfer while both are alive,[10] and upon the death of the first spouse, the interest automatically vests solely in the surviving spouse (without probate). Additionally, if an asset is owned as TBE, the individual judgment creditors of either debtor spouse cannot reach the TBE asset due to the “one marital unit” treatment under Florida law.[11] As with real property and bank accounts, a married couple may structure their ownership interest in an LLC as TBE and thereby avoid probate on the death of the first spouse to die and insulate the asset from a debtor spouse’s individual creditors.

Estate Planning — Another benefit of transferring real property into an LLC is that an LLC can be used for estate-planning purposes. The LLC’s organizational structure, tax-planning opportunities, and ability to maintain control over assets, combine fractional interests, consolidate wealth, restrict unauthorized transfers, provide flexibility in business investment planning, and promote members’ knowledge and communication about the LLC assets make the LLC a valuable estate-planning tool. For example, LLCs can be particularly useful for those with large taxable estates looking to transfer assets in a tax-efficient manner for estate-and gift-tax-planning purposes, because valuation discounts for lack of control and marketability are generally available when partial interests in an LLC are gifted or sold.[12]

Potential for Probate Avoidance — Transferring real property into an LLC can also help avoid the need for an ancillary administration in Florida for non-residents who own real property in Florida. It also may be possible for Florida residents to avoid probate of a Florida LLC after death by including transfer-on-death provisions in the operating agreement.[13] Thus, by owning property through an LLC, the Florida probate process may potentially be avoided, saving time and reducing costs for the property owner’s beneficiaries and heirs.

Considerations Before Transferring Florida Real Property into an LLC

Loss of Homestead — Property owners should be made aware of the consequence of transferring homestead to an LLC. In Florida, real property loses its homestead status when transferred to an LLC.[14] A loss of homestead status results in the property owner forfeiting Florida’s constitutional homestead creditor protection and property tax benefits. In addition, property owners who intend to hold real property in an LLC temporarily and transfer it out of the LLC to be used as homestead in the future should exercise caution because when the real property is transferred out of the LLC to the LLC owner, there will be a change of ownership for property tax purposes and other potential tax consequences (as discussed below).

Documentary Stamp Tax — Florida imposes a documentary stamp tax of 70¢ per $100 on deeds and other instruments/transfers relating to real property.[15] The tax is based upon the consideration transferred, and, even where no money changes hands, if property is encumbered with a mortgage, the remaining mortgage amount will cause the documentary stamp tax to be applied.[16] Therefore, even if a real property owner owns 100% of mortgaged real property, if the real property owner transfers that property into an LLC, the transfer will be subject to the documentary stamp tax.[17] For example, if the owner of real property has a $200,000 mortgage outstanding at the time of the transfer to the owner’s wholly-owned LLC, the owner will be responsible for documentary stamp taxes of $1,400.[18] Ideally, those who desire to use an LLC to own real property will purchase the real property initially through their wholly-owned LLC to avoid the need for a subsequent transfer to an LLC and payment, if there is a mortgage, of additional documentary stamp taxes.

Acceleration Clauses — Mortgage documents typically contain language that permits the lender to call the note due in its entirety upon the happening of specific events. This type of provision is commonly referred to as an acceleration clause or due-on-sale clause. A change of ownership of the property, such as a transfer to an LLC, is one such trigger that typically permits a lender to call the note due.[19] Coming off historically low interest rates, it is yet to be seen if financial institutions will look for opportunities to trigger acceleration clauses to force borrowers to refinance at higher interest rates.[20] Before transferring real property to an LLC, property owners should consider obtaining lender approval.

Reassessment — According to the Florida Constitution,[21] the assessed value of real property for property-tax purposes may only be increased by the lesser of : 1) the Consumer Price Index or 2) 3% for homestead property[22] or 10% for non-homestead residential[23] and commercial properties.[24] However, when there is a change of ownership or control of real property, the real property will be reassessed so that its assessed value equals its fair-market value as of January 1 of the year following the change of ownership or control.[25] A change of ownership or control means any sale, foreclosure, transfer of legal or beneficial title, or the cumulative transfer of control of more than 50% of a legal entity.[26] A transfer of real property to a wholly-owned LLC is considered a change of ownership triggering a reassessment for property-tax purposes.[27] Moreover, this change-of-ownership trigger occurs not only when transferring real property into an LLC, but also when real property is transferred out of an LLC and when more than 50% of an LLC’s ownership interest is transferred.[28] Therefore, property owners, especially those who have owned real property for a number of years or during periods of rapid market appreciation, must consider the potential increase in property taxes when transferring real property.

Title Insurance — The type of deed used for transferring real property into an LLC is important as it can impact whether a preexisting title insurance policy continues to provide coverage after the conveyance. In a deed, the grantor is the legal owner who is conveying the title to the real property and, depending on the type of deed, the grantor may or may not be making representations and warranties to the recipient, known as the grantee, that may be relied upon by the grantee. Two common deed types are the quitclaim deed and the warranty deed. A quitclaim deed is the simplest type of deed. In a quitclaim deed the grantor transfers whatever title the grantor has in the real property to the grantee. However, since a quitclaim deed offers no representations or warranties, the grantor’s original title insurance policy may no longer provide coverage to the grantee.[29] To ensure continued title coverage, the grantee may need to acquire the grantee’s own title policy, even if the grantee is an LLC owned by the grantor who possessed the original title policy. On the other hand, a warranty deed provides representations and warranties by the grantor to the grantee with regards to the title being conveyed. The representations and warranties allow a grantee to look to the grantor if there is a title defect and, because the grantor has liability connected to the title, the grantor’s title insurance coverage should remain available.[30] Title insurance forms vary, and typically include very specific provisions on continuation of insurance, with some defining “insured” to include an entity wholly owned by the named insured. Thus, property owners should consult their title insurer before transferring real property to an LLC if the intent is to be able to continue to rely on the existing title insurance coverage.

Property & Liability Insurance — Insurance coverage, availability, and cost may be impacted when real property is transferred into an LLC. For example, while many assume homeowner insurance protects the house, it actually only protects those named on the homeowner insurance policy as an insured. Therefore, if the insurance policy is still in the name of the individual grantor, there may be no coverage if a claim arises while the property is owned by an LLC.[31] Additionally, a personal umbrella policy and/or general liability policy may not cover the LLC and underlying real property (especially if it is a rental) unless the LLC is added as an additional insured or a new policy is acquired. Furthermore, the type of insurance and amount of coverage available will differ, and the cost of insurance will likely be higher if real property is owned by an LLC, as opposed to an individual. Consultation with a qualified insurance professional before transferring real property to an LLC will provide property owners with valuable information related to costs and coverage options available, as well as help ensure proper protection for the LLC and LLC owner.

Financing — Individuals tend to have more financing options and better interest rates available for residential real property purchases than LLCs.[32] However, for commercial real property purchases, LLC ownership is unlikely to significantly impact financing options. Real property owners who acquire property in their individual names to capture better financing terms but have the intent thereafter to transfer the real property to an LLC must weigh, as outlined in this article, the additional risks and potential consequences of such a transfer.

LLC Administration — An LLC is a business entity created under state law. Therefore, to establish an LLC in Florida, articles of organization and a designation of registered agent must be filed with the Florida Division of Corporations along with payment of filing fees of $125.[33] To maintain status as an active LLC, a Florida LLC must file an annual report between January 1 and May 1 of each year[34] and pay a $138.75 filing fee. Additionally, a Florida LLC must maintain certain records, including information regarding members and managers; a copy of an operating agreement (if in existence), articles of organization, and other documents filed with Florida Division of Corporations; tax returns for the three most recent years; and financial records for the three most recent years.[35] LLC owners should comply with the LLC formalities and treat the LLC as a separate operating business entity (not a personal piggy bank).[36] Failure to do so may result in the loss of limited liability for the LLC owners, thereby exposing the LLC owners’ personal assets to creditors of the LLC.[37] In addition to maintaining the required records, LLC owners should have a written operating agreement, hold member and manager meetings and take minutes, and keep separate financial records and bank accounts for the LLC to further legitimize the separate existence of the LLC from its member owners.

Federal Tax Issues — If real property is transferred and the resulting ownership interests change, then a gift may be deemed to have been made, triggering a requirement to file a gift tax return.[38] For example, if a parent owns 100% of a parcel of real property and then transfers the real property into an LLC that is owned 50% by the parent and 50% by the daughter, the parent may be deemed to have gifted 50% of the fair market value of the real property to the daughter.[39] Additionally, if the LLC is taxed as a C corporation or an S corporation, the transfer of real property from the LLC to the LLC owner is generally treated as a sale to the LLC owner,[40] which may trigger income tax recognition of gains[41] and depreciation recapture.[42] However, the transfer of real property from the LLC to the LLC owner is not a taxable distribution when the LLC is disregarded for tax purposes (single-member LLCs)[43] or taxed as a partnership (two or more members).[44]

Foreign Investment in Real Property Tax Act (FIRPTA) — FIRPTA is a federal law that imposes tax-withholding requirements upon the sale of real property located in the United States by foreign owners.[45] While an LLC is an entity created under state law that is considered separate and apart from its owner, for federal tax purposes, if the LLC is a disregarded entity or subject to partnership taxation, then a foreign owner may still be subject to FIRPTA withholdings upon the sale of the real property.

Corporate Transparency Act (CTA) — CTA requires certain domestic and foreign entities, including LLCs, to provide information about their beneficial ownership to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).[46] LLCs are required to file a Beneficial Ownership Information (BOI) report disclosing individuals who own at least 25% of the company or exercise substantial control,[47] as well as those individuals who assisted in the formation of the LLC (which includes law firms and lawyers).[48] Any changes to the company’s structure or ownership may trigger a new BOI filing requirement. Therefore, when forming an LLC to own real property, LLC owners must remember to file the BOI (within 30 days of formation) or suffer potential adverse consequences (including fines and potential incarceration).


In conclusion, transferring Florida real property into an LLC can provide important benefits, but property owners must first carefully consider the potential ramifications, including the loss of homestead status, the documentary stamp tax, loan acceleration, property tax increases, insurance issues, reduced financing options, ongoing LLC administration, federal tax issues, and Corporate Transparency Act reporting requirements. It is recommended that property owners consult with a qualified attorney, tax professional, and insurance advisor before making any major decisions regarding real property transfers.

[1] Fla. Stat. §§605.0304(1) & 605.04093.

[2] Fla. Stat. §605.0503(3).

[3] Fla. Stat. §605.0503(4).

[4] Treas. Reg. §301.7701-3(b)(1)(ii).

[5] IRS Pub. 3402 (Rev. Mar. 2020).

[6] Rev. Proc. 2002-69. A Florida community property trust may allow married individuals in Florida, a common law state, to have community property ownership of the LLC and maintain the disregarded-entity status. See Joseph M. Percopo, Understanding the New Florida Community Property Trust, Part II, 96 Fla. B. J. 16, 20 (Sept./Oct. 2022).

[7] Treas. Reg. §301.7701-3(b)(1)(i).

[8] See Alan Gassman & Brandon Ketron, Yes, it is Usually Safe to Consider an LLC Owned as TBE as Disregarded for Income Tax Purposes (Dec. 11, 2014), available at

[9] Sitomer v. Orlan, 660 So. 2d 1111, 1113 (Fla. 4th DCA 1995) (“A unique aspect of a tenancy by the entirety is that each spouse is ‘seized of the whole or the entirety, and not of a share, moiety, or divisible part.’” (quoting Bailey v. Smith, 103 So. 833, 834 (Fla. 1995))).

[10] Beal Bank, SSB v. Almand & Associates, 780 So. 2d 45 (Fla. 2001).

[11] Id.

[12] Estate of Mitchell v. C.I.R., 83 T.C.M. (CCH) 1524 ( 2002) (“When valuing unlisted stock, it may be appropriate to apply a discount for lack of marketability, a discount for a minority interest, or a premium for control.”); Estate of Godley v. C.I.R., 286 F. 3d 210, 214 (4th Cir. 2002) (“Often, a discount or premium must be applied to reflect the value an investor places on things such as managerial control, ability to re-sell the shares, and other risks.”).

[13] Blechman v. Estate of Blechman, 160 So. 3d 152, 156 (Fla. 4th DCA 2015); Murray Van & Storage, Inc. v. Murray, 364 So. 2d 68, 69 (Fla. 4th DCA 1978). See also Finlaw v. Finlaw, 320 So. 3d 844 (Fla. 2d DCA 2021).

[14] DeJesus v. A.M.J.R.K. Corp., 255 So. 3d 879 (Fla. 2nd DCA 2018) (involving a corporation); In re Steffen, 405 B.R. 486 (M.D. Fla. 2009) (involving a limited partnership); Buchman v. Canard, 926 So. 2d 390 (Fla. 3d DCA 2005) (involving a partnership). However, it may be possible to receive homestead benefits by leasing real property for a term of 98 years or more. See Geraci v. Sunstar EMS, 93 So. 3d 384 (Fla. 2d DCA 2012) (giving homestead creditor protection to condominium owned as 99-year land lease); Higgs v. Warrick, 994 So. 2d 492 (Fla. 3d DCA 2008) (holding that property subject to 99-year lease qualified as homestead for property-tax purposes).

[15] Fla. Stat. §201.02.

[16] F.A.C.R. 12B-4.013(21).

[17] F.A.C.R. 12B-4.060(9)(f) (providing example of real property with a $75,000 mortgage balance triggering a documentary stamp tax of $525 when the real property was transferred into a property owner’s wholly-owned LLC).

[18] $200,000/$100 = $2,000 x $0.70 = $1,400.

[19] See First Fed. Sav. & Loan Ass’n of Fort Myers v. Fox, 440 So. 2d 652 (Fla. 2d DCA 1983).

[20] Transfers of real property to an LLC are not protected by the Garn-St Germain Depository Institutions Act of 1982 (a federal act which prohibits lenders from calling notes due under very specific situations). See 12 U.S.C. 1701j-3(d). See also Jeannette Mora, Garn-St Germain and Exceptions to Due-On-Sale Clauses 40, ActionLine, (Spring 2023).

[21] Fla. Const. art. 7, §4.

[22] Fla. Stat. §193.155(1).

[23] Fla. Stat. §193.1554(3) (limitation does not apply to school district levies).

[24] Fla. Stat. §193.1555(3) (limitation does not apply to school district levies).

[25] Fla. Stat. §§193.155(3), 193.1554(5), and 193.1555(5).

[26] Id.

[27] S and A Prop. Inv. Services, LLC v. Garcia, 48 Fla. L. Weekly D560 (Fla. 3d DCA 2023). See also Jeff Baskies, Beware of Ad Valorem Tax Malpractice Trap when Transferring Clients’ Florida Non-Homestead Real Property to LLCs and Trusts, LISI Asset Protection Planning Newsletter #433 (Mar. 21, 2023), available at; Brock Exline, The 10% Cap Trap Article, available at

[28] A change of ownership or control is required to be reported to the property appraiser. Fla. Stat. §193.1556(1).

[29] A quitclaim deed “transfer terminates the coverage under the insured’s policy…because it is not a transfer by operation of law and no warranty liability remains in the insured.” Jana L. Armstrong, Title Insurance, Florida Real Property Title Examination and Insurance §4-1 (The Fla. Bar 10th ed. 2022). See also Covalt v. First Am. Title Ins. Co., 105 F. 3d 669 (10th Cir. 1997).

[30] Title insurance “coverage [] continues as long …the insured may have liability by covenants of warranty made in connection with the [transfer] of the real property.” Jana L. Armstrong, Title Insurance, Florida Real Property Title Examination and Insurance §4-1 (The Fla. Bar 10th ed. 2022).

[31] See Strope-Robinson v. State Farm Fire and Cas. Co., 844 F.App’x 929 (8th Cir. 2021) (“[I]n the absence of assignment or express stipulation of the parties…[,] policies of insurance do not attach to or run with the property insured. ..[and] [i]n case of a conveyance or assignment of the property, they do not go with it as an incident thereto….” (quoting Closuit v. Mitby, 56 N.W. 2d 428, 431 (Minn. 1953))).

[32] Casey Bond, Commercial Real Estate Loans: What You Should Know, Forbes Advisor, Jun. 1, 2022, available at; Ilyce Glink & Samuel J. Tamkin, Owning Real Estate Under An LLC Has Advantages, But It Can Be Costly, The Washington Post, Mar. 11, 2020, available at

[33] Fla. Stat. §§605.0201 and 605.0213.

[34] Fla. Stat. §605.0212. If the annual report is not filed between January 1 and May 1, there is an additional non-waivable $400 late-filing fee.

[35] Fla. Stat. §605.0410(1).

[36] See Fla. Stat. §605.0110 (providing that LLC assets are assets of the company and members have no interest in any specific LLC assets).

[37] See Segal v. Forastero, Inc., 322 So. 3d 159 (Fla. 3d DCA 2021) (discusses factors for piercing the limited liability of LLC members: 1) domination and control, 2) improper purpose, and 3) causation).

[38] I.R.C. §2501. However, if the gift is less than the annual exemption ($17,000 for 2023), then a gift tax return would not be required to be filed. I.R.C. §2503(b).

[39] The actual amount of the gift to the daughter will depend on proper valuation of the real property and whether any valuation adjustments (discounts or premiums) need to be incorporated.

[40] I.R.C. §301(b).

[41] I.R.C. §§311 and 1371(a).

[42] I.R.C. §§1245 and 1250.

[43] The entity is disregarded, so for tax purposes, the LLC assets are already deemed to be the LLC owner’s assets.

[44] I.R.C. §731(b).

[45] I.R.C. §1445.

[46] 31 U.S.C. §5336.

[47] Trusts, including individual trustees and beneficiaries, may also be considered beneficial owners.

[48] The LLC’s applicant only needs to be reported for those entities formed after January 1, 2024. 31 C.F.R. §1010.380(b)(2)(iv).

Joseph M. PercopoJoseph M. Percopo, LL.M., AEP, practices law in Orlando with Dean Mead. His practice concentrates on estate and trust planning, estate and trust administration, asset protection planning, business, and tax law. He is a graduate of the Florida State University College of Law with highest honors and earned his LL.M. in taxation from the University of Florida Levin College of Law Graduate Tax Program. Percopo is first vice president of the Central Florida Estate Planning Council, as well as a former RPPTL section fellow and fellow of the Florida Fellows Institute of the American College of Trust and Estate Counsel.

This column is submitted on behalf of the Real Property, Probate and Trust Law Section, Sarah Swaim Butters, chair, and Allison Archbold and Homer Duvall, editors.

Real Property, Probate and Trust Law