BiggerPockets

For the questions you asked, I think they're the same. Both LLCs and S-corps are pass through entities for taxation. You can move the property to either with exactly the same process.

Your lawyer and your accountant would be the best to give advice for which is the best choice for you. Expect, though, some conflicting advice from the two of them.

Originally posted by Zainab Ariyibi

I'm in the process of acquiring more rental investment properties and wanted to know if forming an LLC or S Corp is better? Which has better tax advantages, and which business entity will allow me to transfer the deeds from my name to the company's name faster and easier?

I'm confused as to which route to take, so i'm seeking your recommendations. :D

Thanks to all who respond.

Z

Figuring out which has "better" tax advantages is very dependent upon your particular tax situation.

There is an advantage an LLC has over a sub-S if you have others in the deal.

In a sub-S your percentage of profits follows your percentage of ownership. If you own 50% of the stock, 50% of each years income rolls up to your tax return through a K-1 form.

However, with an LLC the members can decide to disburse profits however they want and change it whenever they want without regard to ownership percentages. So, you and another investor could each own 50% of a deal but to pay them back for their upfront money you two could agree they get 80% of the profits until their capital is returned. Or however you might agree.

I use both sub-Ss and LLCs as well as full blow C corps when the situation indicates the need.

Jon gave you great advice, sit down with an attorney familiar with the type of investing you do or want to do. Do the same with a CPA. If they give conflicting advice then one of two things are true. You shared different information with them or one or both of them are not familiar enough with what you do.

My attorney and CPA are never out-of-sync on large issues they sometimes have different takes on the minute details.

It has always been beneficial to hold rental properties in an LLC but again, get yoiur attorneys and CPA's advice on this before making a final decision.

What works for one, does not for another. There is no one way/one size on this subject.

Thanks again for the information. Will take everything into consideration. I think the route I will take is form an LLC.

Why don't you form an LLC and get taxed as an S corp. Pay yourself a small salary as an officer and then distribute dividends as they come in. This how many businesses are set up.