Incorporate or not for investors with high incomes

2 Replies


From my research, an LLC goes a long way for asset protection when set up and maintained properly. However, it loses some tax benefits. Now, I think many of those benefits are phased out for high incomes, and/or require real estate being your primary profession. My spouse and I earn ~$300k each (w2 for her, k1 for me), which means we qualify for neither. Am I missing major tax benefits that could apply for us that we'd lose with an LLC? Because, it seems like a no-brainer to me to use an LLC with mortgages supported by personal guarantees.

edit: We plan to start with turnkey 1-4unit homes, managed with a management company and with a buy-and-hold strategy.

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I think it can also depend on whether you are planning to leverage with financing or use cash for your purchases. Seems with your incomes you could do either. Using an LLC is going to limit your financing options and raise your costs.

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