Specifiic Tax Advantages LLC Vs S-Corp (in Regards To Real Estate)
Ok, I have read about the difference between S-Corps and LLC's, but what I want to know is this.
Can someone give me some specific advantages and disadvantages as it applies to REAL ESTATE.
Me and my dad and one friend ( 3 people total) will be forming an LLC or S COrp for the sole purpose of fixing up houses and selling them. (flipping).
Later on we will be doing fix and holds.
Can someone give me some specific examples??? Not just "a is better than b"
Thanks.
I'm sure no great tax expert, but one thing I know is S Corp or shares therein, are NOT legally purchasable by SDIRA (self directed IRA).
If your new REI group might include somebody's IRA money, that wouldn't be allowable in that IRA if the group were to be "S" Corp...but LLC units would be OK in a SDIRA account.
Ok.. anyone else? Are LLC's bad for flipping?
i am NOT an expert and I am trying to find out the same things you are. i was told that LLC's are good for HOLDING and S-CORP better for flipping. Not sure if this is right or not. But I have the same questions. i am meeting with a CPA next week and hope that I can get this cleared up as well.
Will step back and see what other answers come in on this....
As you probably already know, both LLCs and S-Corporations are passthrough entities and profits and losses get passed through to the individual shareholders or owners.
They both will provide limited liability up to the contributions and assets in the corporation. There are some differences.
LLCs have no limitation on distribution of profits to the owners. S corporations allow distributions according to ownership percentages.
With an S corporation you will need to prepare payroll tax filings so the care and feeding is a bit more.
If you are a sole proprietor with an LLC you will likely be paying self-employment taxes (15.3% on profits) on top of other taxes.
Both forms of ownership will provide you will protection for your other assets. Many on this web site choose LLCs for holding properties. Hopefully, other opinions and experience will follow.
Yeah... Id like to know more about the self employment taxes issue. Id like to find someone who is an expert in this area... Maybe could write an article and post it or something... ok lets keep it rolling, whos next?
Just read this article...
Click here
I hope i posted that right...
http://www.thecreativeinvestor.com/modules.php?name=News&file=article&articleid=452
Thanks for that article frogger!