I am an LLC here in Texas and have to file a franchise tax accountability questionnaire, does anyone know the NAICS code for real estate investing?
531110 is common for most residential rental property. "531110 Lessors of Residential Buildings and Dwellings"
That is what we use in NC and SC and probably good for all states...
|Corresponding Index |
|531110||531110||531110||Apartment building rental or leasing|
|531110||531110||531110||Apartment hotel rental or leasing|
|531110||531110||531110||Apartment rental or leasing|
|531110||531110||531110||Building, apartment, rental or leasing|
|531110||531110||531110||Building, residential, rental or leasing|
|531110||531110||531110||Cottage rental or leasing|
|531110||531110||531110||Duplex houses (i.e., single family) rental or leasing|
|531110||531110||531110||Dwelling rental or leasing|
|525930||531110||531110||Equity real estate investment trusts (REITs), primarily leasing residential buildings and dwellings|
|531110||531110||531110||Houses rental or leasing|
|531110||531110||531110||Housing authorities operating residential buildings|
|531110||531110||531110||Lessors of residential buildings and dwellings|
|531110||531110||531110||Mobile (manufactured) home, on site, rental or leasing|
|531110||531110||531110||Real estate rental or leasing of residential building|
|531110||531110||531110||Residential building rental or leasing|
|531110||531110||531110||Residential hotel rental or leasing|
|531110||531110||531110||Retirement hotel rental or leasing|
|531110||531110||531110||Single family house rental or leasing|
|531110||531110||531110||Town house rental or leasing|
Thank you for the info. Is there a different code for wholesaling property or flipping?
531390 Other Activities Related to Real Estate seems appropriate. There are no direct NAICS codes related to flipping that I can see.
Thanks! I have also left a message with my CPA and am waiting to here back. But that sounds like it might be the one.
Investing is classified under different activities (dealing vs investing), per IRS regs. Capital Gains are taxed very differently, based on the sale or disposition of the inventory / asset.
Construction/Remodeling for a quick sale is dealing. Building or Remodeling to hold and lease is investing. The intent is what the IRS looks at when classifying the activity. Bankers usually want to know the primary NAICS/SIC for a commercial checking account.
NAICS 236117 - Residential New Spec Home Builder / Investor (Former SIC 1531 Operative/Merchant Builder)
NAICS 236118 - Residential Remodeler / House Flipper / Investor (Former SIC 1531 Operative/Merchant Builder)
NAICS 531110 - Residential Holding / Rehab & Holding/Leasing for 12 months minimum (or more)
NAICS 531120 - Commercial Holding / Rehab & Holding/Leasing Building Landlord (non-mini storage)
OTHER ACTIVITIES RELATED TO REAL ESTATE
Wholesaling could arguably fall under the following extended SIC Codes
SIC 6531054 - Real Estate Buyers Representatives (wholesaler/non-licensed)
SIC 6531026 - House Buyers (wholesaler/non-licensed)
These are cross-referenced with NAICS 531390
Thanks Mike for your information!
I’m trying to get started. I was forming the LLC from the SOS website and saw that I needed the NAISC code. I was searching for what code(s) to be using. I noticed that we could use the 1035 form to roll over profits from a sale to the next property to potentially shield from tax liability but I am still studying that area. Since we can use multiple codes in creating a LLC, do the private lenders or banks have any preference on what codes we use? Do these codes affect the 1035?
I was waiting for Jan 1 to hit to do all the setting up. I have a thousand questions as I try to begin the BP journey. Wanting to hit the ground running devoting tons of hours a week... been reading and studying and overthinking everything for quite some time and still don’t think I’m ready to begin.
I think you're talking about rolling the profits (gains) from one property to another, using the 1031 Tax Deferred Exchange (still valid after the recent Tax Cuts & Jobs Act was approved on 12/22/17), provided under the IRC Code Section 1031. You can read more at the following link >
As far as the NAICS or SIC Code you adopt when you file, you want to choose the primary activity you're engaged in (Construction, Leasing, Wholesaling, etc), so the return reflects revenues & expenses that can be compared to similar returns that are filed, doing the same type of activity. Although this may not be a big deal to you, the IRS can and does compare claimed expenses between businesses engaged in the same type of activity. This becomes especially relevant if a deduction is claimed then is disallowed because the deduction appears to be unsubstantiated. Here's a link to IRS Pub 535 >
Although no one is thrilled about paying taxes, the IRS website has plenty of solid information to read, so that a business owner or investor can stay in compliance with the tax laws and make them work advantageously. Planning is key. A good tax attorney or CPA who works with investors and/or small businesses can help you make the most of your filing and the deductions claimed.
Thank you so much for responding, Mike.