LLC Vs S Or C Corp
I have some money I am going to invest in a realestate venture. I would like to protect myself from personal liabilites and am new to this arena.
Initially it will be just me but I may want to bring in one or two more folks down the road.
An LLC looks like the way to go but I'm not sure. My plan is to invest in this venture, cashout at the close of escrow then do it again. Appreciate any advice as tgo the best vehicle and associated risk or short falls of the various options. Thanks
Typically this question can be best answered by speaking with good CPA. However, in general, when working with real estate, a LLC can be a good choice. The IRS treats real estate held by an S-Corp and LLC differently. This is an important consideration, especially if you wish to avail yourself of an IRS 1031 exchange at some point. Then you'll most definitely want to setup as an LLC. From a simple liability protect standpoint, either should serve you well. Again, I'd advise speaking with a CPA that can really understand your business plan particulars. Good luck.
The rule of thumb is
1) If you are doing "passive" activity such as rental, LLC is the best choice
2) If you do flipping, depends on the quantity. If you buy and sell in small quantity LLC might be better. If you buy and sell in large quantity, to avoid dealer status, S Corp might be better.
That is just rule of thumb. You need to consult with your CPA since he/she understand your specific conditions.
I don't understand the last comment about an S-corp helping you avoid dealer status. Why would that be?
CT