An Limited Partnership (LP) has at least one general partner and at least one limited partner. The general partner has the same role as in a general partnership; controlling the company’s day-to-day operations and being personally liable for business debts. The limited partners contribute financially to the business but have minimal control over business decisions and operations. Limited partners do not play an active role in the business; in return for giving up management power, limited partners get the benefit of protection from personal liability. Whilst they cannot be forced to pay off business debts or claims with personal assets, they could lose their financial investment in the business.
A tax return is filed for the partnership AND for each partner with the more beneficial individual income and capital gain tax rates being applied.
The LP is required to have an Employer Identification Number (EIN), register with the Department of State, engage the services of a registered agent present in the state where trading and file an Annual Report.
This information is not intended to provide a recommendation on how to structure an interest in U.S. real property. The final decision must be based on what works best given the specific facts. Any decision must also take into consideration what is important to the investor(s), taking into account their different objectives, risk tolerances and sensitivities with respect to the various issues involving U.S. income tax, estate tax, confidentiality and domicile taxation. Additional treaty benefits may apply depending upon the domicile of the client. No purchase or investment structure should be implemented based solely on information provided in this article and, in addition, home country tax advice should also be obtained before selection of ownership structure.