Buying investment properties as an individual or company. Which is the best option.

[Zack Costelloe]

Hello PB friends,

I am in the process of gathering information so i can purchase my first home. My plan is to buy and hold a multi-family residence, live in one and rent out the others. Should i setup an LLC and purchase in the company name or purchase as an individual? What are the tax implications of both options.

Thanks in advance. Zack

[Steve Vaughan]

Way to be thinking ahead! Do you mean your first home as an investment? I wouldn't bother putting a SFR in an entitiy either way. The state and federal reporting, tax forms, maintaining the corporate veil, refi barriers, etc are all a pain. I have one of each, 1 s-corp and 1 LLC. I did establish my mgt co (just for myself so no RE license needed) right away, but I do not hold assets in it. For the purpose of maintaining anonymity and gaining some liability protection and estate planning advantages, I own my multi's in an LLC and manage them with the S-corp. As a rule for me, I do not own assets in a corp. Shareholder stuff is more difficult to deal with than member stuff, essentially. It can also tends to be more public, who owns how many shares. Try not to get too bogged down in all this. Best of luck!