Posted by Sebastian on April 10, 2006 at 21:16:54:
Something else that never seems to be pointed out is that even if you are doing flips, the S-corp may be a waste. It is more of a pain to have a S-corp and costs more at the accountants office. If you are netting less that 100k it may pay off to just use a llc even for flips, even though you have to pay the self emp tax(which don’t forget is tax deductible, so not truly 12 or 15%). Look at what type of investing and how much volume you actually plan to do and go to a good accountant to figure it out.
I plan on leaving my main profession in the next year and becoming a full-time investor. I just purchased my first “flipper”. What is the best business and tax structure for being a full time real estate investor? IE…S corp, C corp, LLC. I’ll take any and all advice i can get. Thanks,
Bram
This question keeps coming up, and there is no PURE answer. general rule of thumb, Corp for flips, LLC for rentals. But you need to know YOUR situation, so best advice is get some good advice from a good cpa and/or attorney. Check with your local investors and see who they use for these, and then consult them.
S-Corps are good if you need to offset other income. C-Corp are better if you are self employeed as you can deduct medical insurance, etc.
LLC are usually but not always taxed like a partnership , but you can chose S-corp status if that is better.