Mass Corps Or Trust. Lawyers All Tell Me Different
Hello,
I just moved to Massachusetts from Chicago and need to create some kind of Mass based entity that will allow friends of mine in Chicago and CA to purchase apartments here. I'm mostly looking at small apartment complexes 15-30. Every real estate attorney here has given me conflicting information of which structure is best. The 3 most popular answers are 'LLC', S-corp, 'LLP' while most other investers here swear by the Nominee Trust. I can't seem to get any clear answer why any of these entities are preferred.
S-Corp... aren't they restricted to 25% of their revenue from passive income? Isn't rent passive income? Also, isn't the owner required to take a salary?
Remember, I mostly want to buy/hold and sign for loans. Nothing too fancy.
If anyone could clear this up a little or give me some more direction (or a good MA lawyer that can explain things) please help.
I'd recommend using an LLC or LLP. This will give you asset protection and an easy way to deal with partners.
Yes an s-corp is typically limited to 25% passive income.
The difference between LLC and LLP mostly for you is whether everyone wants an active role in the company or if one or more people are simply putting up cash. In an LLP only the general partner has authority to run the company. You also are left open to liability here so you may want to consider an LLC to serve as that partner.
An LLC is favored if you want to structure something where everyone can have an input.
There are SO MANY senarios to play out and without more specific knowlege, it is more than impossible to try to guide you. I am not an attorney or accountant so make sure to get good legal advise. This is truely a question for professionals although I understand your desire for knowlege so you don't go into this blind.
Good luck.