Posted by BR on January 15, 1999 at 18:17:49:
You are correct about using a corp for flipping but you don’t need to use land trusts for the reason you stated.
They are for taking title for the purpose of disguising ownership.
Should you set up a Corporation when flipping? - Posted by Sheila
Posted by Sheila on January 15, 1999 at 12:56:36:
I’ve been reading this board for a couple of months now and I’ve decided that I would like to start my real estate investing in Wholesale Flipping. However, I’m a little confused about the tax issue. In one of Bronchick’s articles he suggests that if you flip properties you form a corporation and set up a land trust naming your corporation as the beneficiary so you will reduce the risk of being tagged as a “Dealer” by the IRS.
This is confusing because in flipping aren’t you just assigning your rights to someone else? You never actually own the property you just have it tied up until you have an investor interested in the property and then arrange for a simutaneous close thus, never really owning the property. If I’ve misunderstood something please explain it to me.
I would appreciate any advice on this.
Re: Should you set up a Corporation when flipping? - Posted by Bud Branstetter
Posted by Bud Branstetter on January 16, 1999 at 01:16:35:
If you are going to be doing business you do business as the corporation. You sign a contract as an officer in that corporation. Some flips you may have to take title to. If so, you use the land trust instead of your personal or corporate name. If you are going to keep a property long term you do not keep it in that corporation. You sell/transfer to a LLC/limited partnership. Again if title is in the land trust, susequent transfers are not public. You separate the “dealer” properties to the corporation so as not to taint yourself or other entities.