LLC Vs Corporation, Profits
hi there 
why do investor from an LLC and not a corporation for real estate ventures?
do you buy real estate using LLC or corporation ?
what do you do with the profits to skip tax gain ?
thanks
I just filed my taxes so I will comment on my LLC:
- I formed a LLC instead of a corp because it was easy and relatively cheap at $750 with my attorney
- my properties are in the LLC name but income goes thru to my persoanal income tax the same if I owned them in my name
- handle profits from sales the same as if in my own name (1031, etc)
- besides the liabilities plusses, a big feature of the LLC I like is that it makes me look like a professional business owner when making offers for property or dealing with renters. I actually think that i have gotten more lowball offers accepted because the impression was that since I am representing a business I probably do this all the time and will be a sure thing to get a mortgage and close the deal.
regards.
A couple other things to consider include:
In a C Corp. you will be subject to tax at the corp. level and the individual level on dividend distributions (double taxation). You also lose the step up in basis in a C Corp if an owner dies. You can also be considered a personal holding company depending on what other assets the corp. owns and the source of the income.
If you have the property in a LLC treated as a partnership, you do not have any of these issues.
hi Guys,
Thanks for sharing your knowledge
Can I have an LLC with just one person ? Will I have to file income if I were to have LLC pay me ? Can I do medical, home office, etc deductions by having LLC ?
Could you please clarify "losing a step up in the company" ? are you referring to having a family member or someone to step up and manage the company ?
because the are adjacent, you can take this down as one deal. Since they arent income producing right now, rates will be higher. Another problem you will have is constructing a day care center. Most lenders do not like those as they are very high risk. One kid gets hurt, they put it on the news and you are finished. Be ready to put 30% down and pay 9% on the loan.
[addsig]
Being that there is a livable single family residence on the adjacent parcel, do you think that I would be able to get a residential loan eventhough it has been zoned commercial? Lastly, is there any creative financing that I should ask for while I am negotiating with the owners who are both "motivated sellers" ?
You could have the owners finance your purchase thru a Land Contract that would be due after your work is done on the lots. Do a construction loan to build and improve the value of the property. Refinance when the Land Contract is due and the value of the property has increased. You could also rehab and sell the SFR lot to help pay for the day care.
relist it as a 1 acre commercial site and rent out the house in the mean time.