LLC/Scorp different states

4 Replies

Hello

I am turning my home into a rental property in SC and am moving to IL. I may buy a place in IL and eventually rent it out as well. I was told an Scorp in SC would be best but would I be able to use that Scorp for the IL rental too? Also is an Scorp really the best option for 1 or 2 rental properties over an LLC?

You really don't need even an LLC. Check this out, and be sure to read the comments too-

http://www.biggerpockets.com/renewsblog/2013/08/17/rental-properties-llc/

It's your decision of course, but it's a bit of a myth that you have to have an LLC. If you do decide to go the entity route, check with your accountant (who preferably deals with a lot of real estate investors) as to which version of entity to create. No one on BP can give you a completely accurate, or correct, answer on that... that decision should come from a professional. Especially when talking about properties in multiple states.

@Dave Madoch You can have an LLC taxed as as an s corp.

An S corp offers no advantage for rental properties as it is considered passive income. This means it is not subject to self employment tax. The advantage of an S Corp is it can save on self employment tax. That will benefit you on flips but not rentals.

I am not a CPA so make sure you confirm this with your accounting professional. Tax law is complicated and needs to be structured for you specific situation. - Ned Carey

Originally posted by @Dave Madoch :
Hello

I am turning my home into a rental property in SC and am moving to IL. I may buy a place in IL and eventually rent it out as well. I was told an Scorp in SC would be best but would I be able to use that Scorp for the IL rental too? Also is an Scorp really the best option for 1 or 2 rental properties over an LLC?

Never Ever hold real estate long term in any type of corporation. Getting it out is not easy to do.

You do need to be careful about holding appreciable assets in a corporation, even an S-Corp. If you want a CPA perspective, there is a CPA in Washington who has some free guides on both S-Corp and LLC's for all states. He also has some e-books on real estate tax loopholes. They seem pretty helpful but I didn't look at them too deep since I'm also a CPA. I'd guess that some of what he has would be helpful. Free S-Corp & LLC Guides from CPA

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