Info

Commercial Real Estate Pro Network

Commercial Real Estate Professionals who work with Investors, Buyers and Sellers of Commercial Real Estate. We discuss todays opportunities, problems & solutions in Commercial Real Estate.
RSS Feed Subscribe in Apple Podcasts
Commercial Real Estate Pro Network
2017
November
October
September
August
July
June
May
April
March
February
January


2016
December
November
October
September
August
July
May
April
March
February
January


2015
October
September
August
July
June
May
April
March
February
January


Categories

All Episodes
Archives
Categories
Now displaying: Page 1
Aug 17, 2017

Real estate investing requires that you consider your entity selection in order to both benefit from the tax code and protect your assets from unnecessary liability.

 

CPA Patrick Camuso takes us through the considerations and benefits of an LLC versus a S Corporation.

 

Operating as a sole proprietor leaves you exposed for liability that an entity can shield your from.

 

In order to determine which entity option is best for you, it is recommended that you start with a clear understanding of your real estate investing strategy.  

 

The first question you need to answer is will you be passive or active.  If your goal is to buy and hold, and you turn over all of the day to day investment and property management decisions are handled by others, your are passive.   An LLC is a good option for a passive investor

 

If you will be operating a more hands or, “active”, business that flips, or includes a lot of transactions, you are likely a good candidate for an S Corp.  Especially when your income increases beyond $60,000 per year from your real estate investing.  There are additional tax codes that you can benefit from when you are filed as an S Corp.

 

An S Corp does expose you to self employment tax.  Working with your CPA to determine what a reasonable compensation is, you can limit the amount of your income that is applicable to self employment tax.  Additional compensation can be received as distributions that are not subject to self employment tax.  

 

The S Corp comes with additional accounting costs.  You will need to weigh the cost of accounting against the tax benefits if your operation to determine when is the right time to file as an S Corp.

 

Additionally, if you create multiple entities, remember to maintain the corporate veil and keep separate accounting and accounts for all income and expenses.

 

For more information go to:

camausocpa.com

0 Comments