Posted by JHyre in Ohio on July 05, 2002 at 05:50:08:
Depends on the answer to 4 questions:
- What does your L/O as “buyer” look like (e.g.- rent credit? Declining or fixed option?)
- What does your L/O as “seller” look like (e.g.- How many tenants will actually exercise? After how long)?
- What do your personal finances look like?
- What state are you in?
I do not intend to answer these questions online. As a general rule, the transaxtions you contemplate are often treated as “held for sale”, as opposed to “held for investment”- often but not always, for details matter here. The shorter the holding period and the more often your lessees exercise, the more likely you are a “reseller”- in which case an entity that minimizes social security taxes (corporation or limited partnership) is probably best. If the L/O with you as tenent is more like a land contract, then you are probably treated as owning the property, in which case an LLC or LP is probably best.