Tax question- Installment Sale (Sub-S) - Posted by Rene Perrin

Real Estate Investing
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Posted by JHyre in Ohio on January 15, 1999 at 11:09:21:

Rene,

You mentioned that you rehabbed the property. Some people rehab to hold, while others like to flip immediately after rehabbing. If you intended to hold the property, you may use the installment sales method. On the other hand, if you intended to flip, you are a “dealer” with respect to that property and cannot use the installment sale method. You can have rehab properties that are both for investment and for immediate sale- just keep them in separate businesses so that the dealer properties do not taint the non-dealer properties. Chances are that you will want to put the dealer properties into a C-corporation, while the investment properties go into an LLC or S-corp. See Bronchick’s articles for tips on choice of entity and an explanation of the preceeding sentence.

John Hyre

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Tax question- Installment Sale (Sub-S) - Posted by Rene Perrin

Posted by Rene Perrin on January 15, 1999 at 09:48:32:

I recently sold a rehab for about a $45K profit with 100% financing. I sold the home through an S-Corp that I had recently formed. This was the first property done through the S-Corp. I don’t know if the “dealer status” is automatic since the sale was facilitated through a corporation. When I file my taxes for the S-Corp, am I allowed to take the profits over time on an installment basis or do I have to pay taxes on the entire profit?

Also, I have recently relocated to UT. Does anyone know what is involved in changing my corporation from a NJ corp to a UT corp?

Thanks-

Rene