LLC strategy for new Real estate investor

Member since 2018 · 6 posts · 2 votes

Hi everyone,

I'm not sure in which category to post this question, but I'm about to create an LLC with a friend for real estate investing and am debating whether we should elect to be taxed as an S-corp or not. I've been doing a lot of research on this and it seems being taxed as an S-corp is the way to go, but since we are just starting and haven't bought any real estate yet, I was wondering if we should or not. Because I also read that with S-corps we have to pay ourselves a salary, there's more reporting that needs to be done and etc. So just wanted to hear some feedback from other real estate investors.

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Jaysen Medhurst
Rental Property Investor · Greenwich, CT · Member since 2015 · 4k+ posts · 2k+ votes
7y
@Lua Jambeiro, there's no reason to set up a LLC until you actually have a viable deal. Focus on that, not LLC structure.
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Michael Albaum
Rental Property Investor · Petaluma, CA · Member since 2018 · 203 posts · 164 votes
7y
@Lua Jambeiro Is reach out to a real estate CPA...there is a lot more to consider when determining how your entity should be taxed. It’s worth the few hundred dollars to consult with a professional, especially since the 2018 tax code changed a lot of things for real estate investors.
Good luck!
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Basit SiddiqiBusiness Member
Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
7y
@Lua Jambeiro

You have the option of converting the LLC to be taxed as an S-corp at a later time.

You should work with an accountant to see if S-corp is the way to go.
It will depend on what activities you will be doing and the amount of tax savings that would be saved if an S-corp was elected.
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