Becoming an Entity (LLC or SCorp) a smart start?

Question

My husband and I have two rentals plus our own home. Our business decision is for me to get my RE License this October. Our desire is to Flip some properties and Buy&Hold some properties.

Should we become an Entity once I get my license and if so what type of Entity will give us the best TAX benefit?  OR what should be our best strategy for moving forward?

Thank you

Sierra Westrick

Ted Shackleford · Answer

Your personal home should is covered in a homestead....it is already protected

Steve Trotta · Answer

Hi - Always best to consult your CPA on this for pro advice.

However, when I did my first few flips I did them as a sole prop, no corporation.  Recently I formed two LLC's.  One is for me to run my flips through, the other is with a partner that I run our deals through.  There is one school of thought that suggests you should create an LLC for every flip you do to mitigate as much risk as possible.  I don't do that.

LLC's tend to be easier to form and to maintain at tax time and seem to be more flexible than S-Corps.  I have an S-Corp as well for another business.

Jason Dillard · Answer

Protect Your Assets With a Land Trust | CCIM Institute

http://www.ccim.com/cire-magazine/articles/protect...

Rob Beland · Answer

@Jason Dillardwhy the land trust for personal residence?

Jason Dillard · Answer

We use LLC for keepers and S-Corp for flips. However, is it worth the expense of having them in the beginning?  The tax preparation and bookkeeping for each company is costly. If you already have something to protect then maybe it's worth it.  If not, focus on deals for the first couple of years.  In the mean time, buy an extra 1m in liability on your existing insurance policies(it's cheep).  Get your personl home out of your name into a land trust now. Later, meet with CPA for specific advise you're looking for.