Is a C corp right for real estate? - Posted by Dena

Posted by marc on July 14, 2003 at 12:15:32:

Thanks Frank, I will read that article.

Is a C corp right for real estate? - Posted by Dena

Posted by Dena on July 10, 2003 at 11:18:59:

I am new to real estate investing and after reading many books know I want to set up a formal business structure. I’ve read in places that the C corp was great and I’ve read that it’s terrible for real estate. I need a straight answer. I live in Arizona and in addition to investing in real estate, I would also like to roll in my existing sole proprietorship marketing business into this new structure. Could anyone advise if a C corp is right or not and if it isn’t a good choice, what would be? Thank you so much.

Re: Is a C corp right for real estate? - Posted by JHyre in Ohio

Posted by JHyre in Ohio on July 12, 2003 at 12:11:43:

See my How-To article on this subject. Yours is not a simple question and does not have a simple answer, because details matter…the exact nature of the business (flips? rentals? size?) and your personal finances (LOTS of details). In general, I would NOT put rentals into a C-corp.

John Hyre

Re: Is a C corp right for real estate? - Posted by Marc

Posted by Marc on July 14, 2003 at 24:33:55:

John
I also have this question of why do you not want your Corporation to own RE. I have search for your ?how to? article and was unsuccessful. Could you send a link, or explanation on where to find it?
thanks

Re: Is a C corp right for real estate? - Posted by Frank Chin

Posted by Frank Chin on July 14, 2003 at 05:02:51:

Hi Marc:

Here’s the link:

http://www.creonline.com/articles/art-202.html

A quick answer is as a stockholder of a “C Corp” you’re double taxed.

If you bought a property at 100K FMV, sold it some years later at 300K, the “C Corp” will pay the 200K capital gains tax plus recapture. When you take the profit out of the “C Corp” as dividend, you’re taxed again on the dividend as a stockholder.

In “S Corps” and LLC’s, you just pay the tax, and take the profits out.

Frank Chin

Re: Is a C corp right for real estate? - Posted by jenv

Posted by jenv on July 25, 2003 at 14:52:30:

My understanding is that it’s worse than that: a C-Corp also doesn’t receive long-term gains treatment e.g. a lower tax rate upon sale, so it’s really a triple-whammy to hold long-term real estate in a C-Corp.