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Real Estate Law | Form required for LLCs

By ERIC P. FEICHTHALER - Real Estate Law | Apr 15, 2024

Eric P. Feichthaler

Dear Mr. Feichthaler:

I have a rental property in Cape Coral that has had the same tenant for five years. Great tenant, no problems. I bought the property in a limited liability company, rather than my personal name, to provide asset protection and to separate the income and expenses.

I heard the federal government has enacted something called the “Corporate Transparency Act”, which may require me to file reports with the government. I understand the reason for this is to fight against tax fraud and money laundering. My single rental can’t be subject to this, right?

Carter S.

Dear Carter:

Many of my clients hold real estate and their small businesses in LLC’s or other entities, and they share your concerns. As if there are not enough hoops to jump through to conduct any business or investment, you have heard correctly. The Corporate Transparency Act (CTA) has been enacted, and requires ALL businesses like yours to file a Beneficial Ownership Information Report (BOIR) with the Financial Crimes Enforcement Network (FinCEN). A beneficial owner is defined as one owning at least 25% of an LLC or Corporation, or exercises substantial control. The definition encompasses nearly every small business in Cape Coral, as well as LLCS that hold real estate like yours.

The reports to be filed are not terribly complicated, but must be file online through the FinCEN website. The good news is that these reports are not due until the end of the year, so you have time. Also, you may have heard there was a court decision holding this Act unconstitutional, stating that it “exceeds the Constitution’s limits on Congress’ power.” Some have reported that this case invalidates the Act, and that the reports are no longer required. The court ruling, however, only applies to members of the National Small Business Association, which is the plaintiff in that court case. It is very, very unlikely you or any small business in Cape Coral is a member of the NSBA. That means, as of now, the report is still required.

For many, the benefits of holding real estate in LLCs will continue to outweigh the administrative and set-up costs of creating them, even with this new bureaucratic hurdle. As with many state and federal regulations, failure to comply with reporting requirements can have serious consequences. Penalties were recently increased to $591 for each day the report is late. In summary, the CTA applies to nearly every entity that is registered with the State of Florida as a corporation or limited liability company. We are advising owners to file.

Eric P. Feichthaler has lived in Cape Coral for over 35 years and graduated from Mariner High School in Cape Coral. After completing law school at Georgetown University in Washington, D.C., he returned to Cape Coral to practice law and raise a family. He served as mayor of Cape Coral from 2005-2008, and continues his service to the community through the Cape Coral Caring Center, and Cape Coral Kiwanis. He has been married to his wife, Mary, for 22 years, and they have four children. He earned his board certification in Real Estate Law from the Florida Bar, and primarily practices in real estate law and wills and trusts. He is AV Preeminent rated by Martindale-Hubbell for professional ethics and legal ability, and is a Supreme Court Certified Circuit Civil Mediator. He can be reached at eric@capecoralattorney.com, or 239-542-4733.

This article is general in nature and not intended as legal advice to anyone. Individuals should seek legal counsel before acting on any matter of legal rights and obligations.