Celebs use LCCs to buy property, should you too?

You wouldn’t find Alicia Keys’ address in Syosset using a simple property records search: She purchased that home (seen here) under a corporate identity. The same goes for Billy Joel's house in Centre Island, Howard Stern's house in Southampton and a slew of other celebs on Long Island who prefer to keep where they live private.

Setting up a Limited Liability Company, or LLC, can afford a famous homeowner such a welcome buffer from the public eye. But could the average Joe benefit from doing this, too?

Maybe, says Josephine Tomasello, a Manhattan-based CPA and Holbrook resident. “LLCs are not uncommon, and it’s usually for tax and liability reasons,” she says. “LLCs are usually set up for real estate transactions, the main reason being not to shield names, which may be an intended benefit, but there are tax benefits,” she says. “There can be multiple owners, and more flexibility with the tax issues when selling the property,” she says.

The owners have several choices in how the LLC will be taxed; if qualified, it can be taxed as a corporation, a partnership or as personal income. And in the event of a lawsuit, only the owners’ investment in the LLC may be at stake, while other personal assets may be protected from liability.

But it’s not for everyone, says Commack-based real estate attorney Lita Smith-Mines. “The reason many celebrities set up ownership this way is for anonymity, but for the average person the extra expense of setting up a corporate entity solely for privacy is not worth the legal and state filing fees and annual tax returns,” she explains.

Smith-Mines says that a lender is unlikely to give a mortgage to a newly formed corporation with no track record, earnings or assets. “So anyone who needs to borrow is probably guaranteeing personally anyway,” she points out.

“Unless there's a reason to hide your identity, shield your personal assets, or engage in estate planning by putting the house in a trust, I don't see the benefit,” Smith-Mines says.

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