Kowal is a Certified Public Accountant with an MS in Taxation, maintaining a nationwide practice focused on IRS Practice and Procedure and federal taxation of real estate.

Kowal is a Certified Public Accountant with an MS in Taxation, maintaining a nationwide practice focused on IRS Practice and Procedure and federal taxation of real estate.

You put off the taxation of the gain.

Each structure has pros and cons depending on your income levels, business goals, reinvestment strategy, and whether or not you plan to distribute profits.One of the key benefits of a C Corporation is the flat federal tax rate, which can be very attractive if you and your partners are in high personal tax brackets — especially if you’re planning to reinvest profits back into the business rather than distribute them immediately.That said, a C Corp also comes with its own downsides, like potential double taxation if you’re taking dividends.

And, in any case, it can only help you forward, not with the profits already made.Considering that flipping is nothing but a job, in the sense that you must continuously spend your time on it, plus its highly unfavorable taxation, flipping is typically considered just an initial booster step for real estate investors.

A reit just an entity structure that has special taxation.

This means a portion of the previously taken depreciation will be subject to taxation, effectively lowering your adjusted basis in the property and potentially increasing your taxable gain at the time of sale.

Leave the rest to your CPAs.For everyone: in taxation, there is a huge gap between what the law and the rules prescribe and the real world.

Buying with a seller-financed note spreads his capital gains over time, which can ease his tax hit and cash flow.If he puts the properties in a trust with you as beneficiary, the step-up in basis rules matter, if he passes them down after death, you’d get a full step-up and could sell later with minimal capital gains tax.You’ll also want to think about depreciation recapture, future rental income taxation, and possibly creating an LLC for liability and expense deductions.

Kowal is a Certified Public Accountant with an MS in Taxation, maintaining a nationwide practice focused on IRS Practice and Procedure and federal taxation of real estate."