| A corporation is generally an inefficient way to take | | | | get liability insurance policies with large limits. |
| title to a property. Everyone seems to want to form a | | | | If you shop around, you can probably find an insurance |
| corporation, but resist the temptation. A corporation is | | | | company that will write a one million dollar umbrella |
| subject to double taxation; that is, they pay tax at the | | | | policy that could be attached as a rider to your |
| corporate level and any dividends that are distributed | | | | homeowner's policy, naming all of the specific |
| to stockholders are taxed as well. | | | | properties you own. Unless you own a large number |
| Corporations are unable to flow through any tax | | | | of properties, this umbrella policy probably can be |
| losses to be used by individual shareholders. The main | | | | purchased for as little as $75 to $100 a year. |
| reason that people form corporations today is to avoid | | | | There are a number of things you can do as an |
| personal liability and they do so out of ignorance. There | | | | individual to overcome the problems associated with |
| are some simple ways to avoid liability, even when you | | | | liability in real estate ownership. If you form a |
| are investing as an individual. One example, is a | | | | corporation, you are going to find that the cost of |
| nonrecourse loan where the lender's sole recourse is | | | | forming that corporation, as well as the cost of lost tax |
| against the property itself and not against you as an | | | | benefits, is going to far offset any comfort that you |
| individual. Another way to protect yourself would be to | | | | may have received from forming the corporation. |