To Corp or Not? - Posted by Ed

Posted by Chris JP on February 24, 2002 at 07:02:57:


I’m interested in doing a similar thing as Ed, and I’m curious - where have you heard about the IRS cracking down on REI C-corporations? Is it “common” knowledge, or have you recently seen specific articles/websites/etc. about it?

I’m still in my initial learning phase, looking to get started soon, and I’m interested to know what the IRS is up to…it could influence my gameplan.


To Corp or Not? - Posted by Ed

Posted by Ed on February 20, 2002 at 16:46:17:

I am selling my home in NY and profitting some cash.

I am looking to move to florida and purchase 3 or 4 homes (over a period of a year or so)for investments. Should I set up a corporation for the investment properties or should I just leave them under my personal name.

What is the Pro’s and Con’s for this? Should I C or S corp it?

Any information would be appreciated.


Re: To Corp or Not? - Posted by jim

Posted by jim on February 20, 2002 at 17:48:41:

Pros: (1) If you put them into a corp, you would be insulating yourself from liability. (2) You would also be keeping your name off the local land records (this matters to some people, it might not matter to you).

Cons: (1) If you put these properties in your name, your heirs/estate will be able to take advantage of the stepped up basis upon your death. This could save your heirs many thousands in capital gains taxes. There is no stepped up basis if you put the properties into a corporate name. (2) If the property is in your name and you wish to sell it, you could make it your personal residence for at least two years and avoid paying capital gains taxes on the sale.

Yuo should talk to your accountant about whether a C or S corp would be more advantageous to you. If you use a C corp, beware of deductions. The IRS is now cracking down on these C corporations used by real estate investors.