LLC names For showing that you are a "Rental Owner" not "Trader"

LLC names For showing that you are a "Rental Owner" not "Trader"

Fresno, CA · Member since 2015 · 552 posts · 181 votes

I was wondering because of the "trader status" if you sell too much real estate if it's better to put the word Apartments or Rentals in the name instead of a generic name

Like Outback Apartments LLC instead of Just Outback LLC so it shows that your 'intent was to hold it long term'. Shows more proof?

This is because I hear if you buy and sell properties often in one LLC you can be hit with IRS 'trader status' making it so you get taxed on short term capital gains ordinary income VS long term capital gains. When you sell even a rental.

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Developer · NY/NJ/PA · Member since 2018 · 758 posts · 935 votes
7y

Lol the name does not matter 

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  • Developer · NY/NJ/PA · Member since 2018 · 758 posts · 935 votes
    7y

    Lol the name does not matter 

  • Fresno, CA · Member since 2015 · 552 posts · 181 votes
    7y
    Originally posted by @Syed H.:

    Lol the name does not matter 

     What does matter?

    I heard intent matters and if your name includes the intent wouldn't that be part of an argument? 

  • Developer · NY/NJ/PA · Member since 2018 · 758 posts · 935 votes
    7y
    Originally posted by @Susan O.:
    Originally posted by @Syed H.:

    Lol the name does not matter 

     What does matter?

    I heard intent matters and if your name includes the intent wouldn't that be part of an argument? 

     What matters is what you actually do with the entity. Intent does matter, but a name doesn't show intent. You can name it anything you want. 

    You can name your company "long term rental owner llc" and still be hit with trader status if you are flipping multiple properties every year. 

    It is pretty easy to show the difference in intent & actions when you have a rental vs being a flipper/trader.

  • Investor · Detroit, MI · Member since 2015 · 32 posts · 12 votes
    6y

    Thanks to all you guys for the tips!  I was unaware of the sensitivity of name choice.  I am starting with wholesaling, but in time, I want to go on to Buy & Hold and possibly flips.  Now I know that those flips, done under the company name I now have, may foster conversation and distinctions made with the IRS.  I will keep my ear attuned to this.

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