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Comments from Our Experts
How does the information in this article apply to the veterinary profession? We asked two experts, an accountant and a lawyer:
Overall, I think the article is quite good, and this is information many veteri- narians have questions about. However, I have two observations.
First, I am not in complete agreement about the disadvantages of the LLC, especially because this is the entity often recommended to veterinarians for their real estate. In some states, establishing an LLC is as easy as filling in a simple online form and submitting it to the state. In addition, there usually is not a great deal of activity in a veterinary real estate entity, so the cost of the tax preparation should be minimal.
Second, the use of examples set in California may be misleading. California’s laws and regulations often differ significantly from those in other states.
Other than these points, I think the information is relevant to the veteri- nary profession.
— Nikki L. Quenette, CPA, CMA Quenette Veterinary Consulting, LLC
The article does a good job of reviewing certain options on legal entity ownership for commercial real estate and the tax and liability issues that veterinarians should consider when contemplating buying commercial real estate.
However, it is important for readers to understand that many states offer other types of legal entities that are viable options beyond the LLC, sole ownership/joint ownership/formal general partnership, formal limited partnership and corporation identified by the authors.
The options available and the applicability of the type of legal entity for the commercial real estate ownership need to be tailored to the needs of the individual owners and the laws of the state where the real estate is located.
In addition, some of the historical norms that the authors identified for obtaining a loan for commercial real estate may be based upon data and experiences which occurred prior to the current economic downturn.
We are seeing a much different lending environment where historical norms and expectations of lenders are generally not followed.
It is also our experience that commercial real estate appraisals have become very unpredictable and are causing a great deal of difficulty in completing commercial real estate transactions because the values have been dropping very rapidly in many markets.
It is important that buyers and sellers stay up to date on the current expec- tations of lenders and not rely upon historical norms before they begin the process of purchasing or selling commercial real estate.
I enjoyed the article but I believe that information on the current lending environment would be very helpful to readers.
— Ed Guiducci, JD Guiducci&Guiducci, Arvada, Colo.
Trends magazine, November/December 2010
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