I need an LLC for property but what about a S-corp too?

Question

Hey Yall,

I live in FL. I am looking at properties in NC, SC, GA, and FL. I understand the need for an LLC to separate my personal wealth from my investment properties. How about an S corp for the  LLC to flow money and bills to? LLC will be in whatever state the property is in , the s corp will be in state of florida.  Perhaps I am overthinking, I do have some assets already I dont want to pay more taxes than I have already been paying 22% or more.

BTW, my name is Charlotte .

Michael Plaks · Answer

BTW, Charlotte, "y'all" is for Texans. Floridians are barred from using it. ;)

If you are looking at buying rental properties, LLCs will not change your taxes, and S-corps will increase your taxes. You don't need either, not for tax purposes anyway.

Fulton Abraham Sanchez · Answer

Hi Charlotte, great question and you’re not overthinking, this stuff gets confusing fast.

Big picture:

• Long-term holds are usually fine in plain LLCs. An S-corp on top can make sense for active income (flips, wholesaling, property management), but it doesn’t usually reduce tax on pure rental income and can add payroll and multi-state filing complexity.
• With multiple states (NC/SC/GA/FL), you’ll also want to factor in state filing and nexus before stacking entities.

Long-term holds are usually fine in plain LLCs. An S-corp on top can make sense for active income (flips, wholesaling, property management), but it doesn’t usually reduce tax on pure rental income and can add payroll and multi-state filing complexity.

With multiple states (NC/SC/GA/FL), you’ll also want to factor in state filing and nexus before stacking entities.

You’re smart to think about protecting assets and your 22% bracket, but I’d model a simple version first (just LLCs + your current return) and only layer in an S-corp if the numbers and activity level really justify it.

Charlotte Goodman · Answer

Thanks I appreciate your response

Rohullah Sharifi · Answer

I would recommend to register LLC for rental to transfer the liability to LLC. S Corp is not recommended or suitable entity for the rental.

Aaron Zimmerman · Answer

An S corp usually does not make sense for rental properties from a tax perspective. You're shifting money out from passive income (generally) to an S corp (active income) and you'll need to pay some of the earnings out as a w-2 wage (thus increasing taxes). If anything, consider a single member llc (that flows to Schedule C) and try to match the income with the expenses. If you have children, I'd look into how you can pay your kids legally for age appropriate tasks (for instance a 16 year old mowing the lawn).

Kevin Aumack · Answer

Hey Charlotte,

If you’re just starting out, I’d go with an LLC. In my experience, most lenders I’ve worked with, especially for DSCR loans, like seeing a separate entity rather than personal ownership.

The tax advantages aren’t huge at the beginning, but opening a bank account under the LLC and running all income and expenses through it made things way cleaner for bookkeeping and taxes. It also helped me keep personal and investment money separate, which reduces stress.

Ashish Acharya · Answer

Hi Charlotte,

I’m also from FL, so it’s great to connect with a fellow Floridian!

When it comes to structuring your investment properties, you're on the right track with the LLC to protect your personal assets. As for adding an S Corp, it could make sense if you're looking to optimize taxes, especially if you plan to pay yourself a salary from the LLC and take advantage of pass-through taxation. However, it’s important to remember that S Corps are generally used to minimize self-employment taxes on active income, which may not be as beneficial for rental income, since rental income isn’t subject to self-employment tax.

Also, with properties across multiple states, the LLC should be set up in the state where the property is located (NC, SC, GA, or FL), and the S Corp in Florida can be used to manage your operations and provide additional liability protection. Just be aware of the filing requirements and possible taxes for each state, some states have franchise taxes or other fees for LLCs and S Corps.

If you’re already paying 22% or more, an S Corp structure could potentially reduce self-employment taxes on any business income, but it might not change the tax treatment for the rental properties themselves.

I’d recommend chatting with a CPA who specializes in real estate investing to fine-tune the details and make sure you’re not overcomplicating things. Let me know if you'd like more info!

Todd Anderson · Answer

@Vespa Trixie

Charlotte,

Most of the investors I work with in the areas that you are looking do a combination of entities.  Many will get the properties in their own name.  That way they can use the depreciation to reduce their own tax liability.  Once they get a number,  2,3,4, In an area they will move them into an LLC for liability reasons.  Just to keep asset pools at a smaller level.

I have not heard of a good reason to have an S Corp to won properties.  I have formed a few but that was for business reasons.  I would not recommend that for just owning investment property.

Let me know if you are in need of finding more properties in your chosen areas.  we have off market new builds in all those markets.

Best of luck

Gregory Wilson · Answer

If you are going to have tax losses, a 100% owned LLC is a disregarded entity and will not require a tax return separate from your schedule E. To lower audit potential a partnership LLC is 1 tenth the likelihood of IRS audit but you need a partner. If you have tax profits and you are a real estate professional the S Corp will allow you to avoid some or all of the 15+% self employment tax.

Charlotte Goodman · Answer

thanks

I need an LLC for property but what about a S-corp too?

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