capital contribution to my S corp

[Sean Jafari]

I listened to my real estate agent and opened up an S corp few years ago, since then I have purchase a few rental properties and was able finance a 2 of them and purchased the rest in cash.  is financing/buying a new property from my own personal account under s corp considered a capital contribution? or it would have been better if I wrote a promissory note to myself (loan the money)?

and when I am ready to sell these properties, how do I take my own money out of the corporation with out paying taxes on it. I understand I will have to pay capital gain tax on the appreciation. 

[Steven Hamilton II]

Originally posted by @Sean Jafari:

I listened to my real estate agent and opened up an S corp few years ago, since then I have purchase a few rental properties and was able finance a 2 of them and purchased the rest in cash.  is financing/buying a new property from my own personal account under s corp considered a capital contribution? or it would have been better if I wrote a promissory note to myself (loan the money)?

and when I am ready to sell these properties, how do I take my own money out of the corporation with out paying taxes on it. I understand I will have to pay capital gain tax on the appreciation. 

 First of all I would stop acquiring properties in an S-corp. You should never listen to a real estate agent for tax advice.

Do not acquire more under the corp you will incur significant tax issues and your heirs will deal with hell later on upon inheriting the corporation's shares. 

I would advise just capitalizing the entity with money rather than a promissory note on which you WILL have to pay interest. If you don't the IRS can impute interest on the amount.

In additional when you sell the properties, the capital gains will pass through to you via the K-1 you receive. Next time use a SMLLC or hold it in a partnership with a spouse.