Fact or Myth: You Should Not Purchase Property in Your Personal Name

Picture this:

You’ve been researching for years to buy your first investment property. 

You have nailed down everything from your dream property’s profile to the perfect price range that fits your budget, when suddenly you hear some stray advice from a real estate investment guru while scrolling TikTok:

“You should never purchase property in your personal name!” 

But is that really true? Or is it one of those real estate myths that gets repeated so often that everyone just accepts it as a golden real estate rule? Let’s unpack the facts, the risks, and the situations where this advice might (or might not) apply.
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The Myth Explained

If someone is warning you to purchase property underneath a legal entity, they’re not just trying to create extra work for you. The idea behind this sentiment is that purchasing property in your personal name exposes you to unnecessary risk and limits your financial flexibility. Many investors and advisors recommend using a legal entity like an LLC to hold your property instead.

But before you assume that putting everything under a business name is a no-brainer 100% of the time, it’s important to understand why people do so to get an idea of if it’s the right move for you to make too!
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The Case Against Buying in Your Personal Name

1. Personal Liability
   If you own property in your personal name and something goes wrong (let’s say hypothetically that a tenant is injured on-site or sues you) your personal assets like your savings, car, or home could be at risk! Purchasing property underneath a legal entity can create a legal separation between you and the asset, offering you that extra layer of legal protection.
   
   
2. Tax Flexibility
   Owning property through a business structure can sometimes allow for more deductions and be a solid part of smart tax planning strategies, especially if you own multiple properties that are generating income. 
3. Estate Planning
   Holding property in a trust or company can simplify inheritance and succession planning. This can take a lot of the headache out of transferring your real estate assets to beneficiaries.
   
   

When Buying in Your Personal Name Makes Sense

As with most things in the real estate investment world, this “golden rule” is not that simple!

For some property owners (including first-time homebuyers and small investors in particular) it can actually be simpler and more cost-effective to purchase property in your personal name.

Some potential benefits of doing this can be:

1. Lower Upfront Costs
   Setting up and maintaining a company involves ongoing administrative and accounting fees. For a single property, those costs might actually outweigh the potential benefits!
   
   
2. Favorable Loan Terms
   Banks typically offer better mortgage rates and lower deposit requirements to individuals rather than companies. If you’re buying your first home or an investment property, this can make a big difference in your financing options.
   
   
3. Simplicity
   Sometimes a property owner wants to keep it simple at all costs, and that’s fair! Personal ownership means straightforward tax reporting, and skipping the complicated corporate returns/maintaining complex records. 
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It Depends on Your Goals

Ultimately, whether you should purchase property in your personal name or under an entity depends on your:

• Investment goals (short-term profit vs. long-term portfolio)
  
• Risk tolerance
  
• Tax situation
  
• Future plans for the property (e.g., inheritance, expansion, rental income)
  

A good rule of thumb is that if you plan to own multiple investment properties, or you’re building a real estate business, a company structure makes more sense.
But if you’re buying a personal home or a single rental property, purchasing in your own name may be perfectly fine. As with many of the real estate “rules” that you’ll see floating around online, it depends on your personal circumstances.
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The Verdict

This real estate rule is completely true…with a few exceptions!
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It’s true that you should probably purchase your investment property using a legal entity. But it’s also not always the only plan of attack for your specific situation.

The right approach depends on your financial position, risk appetite, and long-term strategy. At NREMG, we’re here to make your real estate journey clear and confident from start to finish.

 Whether you’re buying your first home or expanding your investment portfolio, our team helps you navigate every decision!

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