What forms of ownership should be used for German Rental structure with US And DE residents

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I have wandered and searched and can't find an answer- we are a dual national couple formerly in Berlin, now residing for the foreseeable future in USA---

 

My husband is a German-US dual national and his father would like him to buy a rental in conjunction with his German siblings. We are trying to find out what financial structure/s makes sense for all of us.

 

Should we create a GMBH to buy the property and ourselves have an LLC in DE or foreign to hold our share? Should we have a Gmbh send us distributions- what makes sense both for Germans and for us? Liability is an issue as well as the ability to buy siblings out if they so desire, so should it be a partnership structure or shares with a buy out agreement?

 

Once we figure it out we want to hire someone to set the structures up and then probably file whatever tax forms for the entity/ies that are needed annually.

 

We need to figure out initial structure to determine how to buy the property and to finance it through the bank.

 

I would be grateful both for an understanding of what to do and referrals to someone who could actually do it.
 

 

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On 7/30/2020, 1:49:37, gail123 said:

My husband is a German-US dual national and his father would like him to buy a rental in conjunction with his German siblings. We are trying to find out what financial structure/s makes sense for all of us.

 


 

The technical legal term we lawyers use for a family co-ownership/co-management arrangement of the type proposed by your H's (no doubt well-meaning) father is:  crazy.

 

What possible economic purpose would be served by such an arrangement?

 

In my view, assuming that the right property can be found at all, the only financial structure that makes any sense would be one in which each sibling buys their own property and manages it independently.  That will eliminate the need to obtain coordinated agreement on object, purchase price, financing, management, capital improvements, landlord-tenant relationships, taxation, accounting, exit strategy (i.e. buyout, sale, death), etc, etc. ad nauseum.

 

And why, for the love of all that's sainted and holy would your husband want to buy and participate in the management of property on the other side of the planet rather than where he actually lives?

 

Unless H's Dear Old Dad is threatening to disinherit him if he doesn't agree to participate in such a cockamamie scheme, my advice would be to find some way to gently let the Auld One down and find a more sensible way of investing your money.

 

 

 

 

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why would anybody want to do that?

 

Let me suggest something else:

Each sibling, or anybody interested in owning rental property anywhere, finds a suitable piece of real estate - close to where they live - and buys it.

Then you go look for tenants, manage the property (or hire somebody to manage it for you), do your taxes, .... and live happily ever after.

 

 

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Yes. Not useful answers. We own rental properties in the US already, thanks for the advice. We would like to have a property in Germany as earning euros will be useful

when our children go to university there. It’s a profitable family owned property and the older generations want out. So my question

is how to best facilitate what we want to do (which worked for the older generations for 60 years) for our strange circumstance of bringing US citizens into the mix. Not suggestions on not to do what we want. 
BTW- if this were in the US I would know exactly how to do what I want. It is quite possible no one in this forum can give me guidance from experience and I thank those who use their experience to help others. 

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2 hours ago, gail123 said:

BTW- if this were in the US I would know exactly how to do what I want.

 

 

Why not tell us how you would set this up in the US, and then see who comes in with founded reasons NOT to do similar in Germany?

Obviously, your situation is somewhat "special", so whatever solution you do come up with, please take the time to post it here, just in case somebody else comes to TT with a similar question.

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10 hours ago, gail123 said:

We would like to have a property in Germany as earning euros will be useful

when our children go to university there. It’s a profitable family owned property and the older generations want out. So my question

is how to best facilitate what we want to do (which worked for the older generations for 60 years) for our strange circumstance of bringing US citizens into the mix.

 

OK.  You have added facts that were not apparent from your first post.

 

Evidently, the proposal does not require your husband to actually buy a property with his siblings but rather to assume an ownership interest in an existing "family-owned" property that appears to already include multiple generations some of whom are seeking to exit even as it has been proposed that your husband "enter" into the co-ownership arrangement.

 

I'm afraid it is not at all clear what the status quo is much less what it is you (or someone else?) wants to do or the economic rationale for doing so. The notion that earning Euros in this fashion and location will somehow be useful for when your children eventually go to university here makes little or no economic or practical sense.  I suspect that the USD or any other currency earned from your US rentals or from any other source will be freely exchangeable for Euros when and if the need for them arises; assuming, of course, the Euro is still in existence. Nor is there anything convincing about the assertion that - something undisclosed - "worked for the older generations for 60 years".  A lot has happened in 60 years and will likely happen in the next 60 and as you note: the older generation is looking to get out of this arrangement.

 

There are far too many undisclosed facts, variables and circumstances that would need to be explored in depth before anyone could hope to offer you the useful advice you seek.

 

You will likely need a team of - competent & preferably bilingual - legal and tax experts on both sides of the Atlantic and a real estate professional in Germany working together.  That is going to be very expensive.

 

Good luck.

 

 

 

 

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