Investor · Sneads Ferry, NC · Member since 2016 · 28 posts · 4 votes
Hello again
My two partners have located a house under market that we plan on selling.
Should I use an LLc for this house? Are there any tax benefits? Let me know if more information is needed thanks
I've researched LLc before but there's so much information to go through I'm hoping someone has experience in this position
I am not a CPA but from everything I have read, there are not really tax advantages of an LLC. I believe you can claim the same expenses and deductions through the Schedule C on your personal taxes and your profits are taxed the same as a business.
The main difference comes from a liability standpoint. If you are running this business in your name and something goes wrong, someone can come after everything you own. If you run it through an LLC then they can only come after the assets of the LLC, which you would presumably keep to a minimum.
Check with your CPA and Lawyer. If you are going to be serious in the business you should have these folks in place to give advice. A rule of thumb I have heard is that a good CPA should save you 10x more than you pay them. These two professionals should pay for themselves.
Unless the LLC is elected to be taxed as an S Corp, there will be no benefits. A base LLC is a flow-through taxation entity which does nothing much as a tax strategy.
@Brandon Smith You should consult with your CPA about your particular situation. However, in general, if you are doing fix and flip deals, it is typically better to set up the entity as an S-Corp or as @Ben Leybovich suggested, elect to have the LLC taxed as an S-Corp to save on self employment taxes.