Posted by FBN on November 05, 2005 at 07:22:18:
In this scenario which entity would be best for flipping to avoid SE tax?
LLC’s - Posted by Austin (AZ)
Posted by Austin (AZ) on October 24, 2005 at 14:44:38:
I was thinking of setting up a LLC for the obvious tax reasons, I imagine that there are people in this forum who operate under LLC’s. I was wondering what the best way to go about forming one was and what was the best way to use an LLC to the advantage of a Real Estate Investor.
Any help would be appreciated.
Austin
Re: LLC’s - Posted by John Merchant
Posted by John Merchant on October 24, 2005 at 17:11:12:
Your questions tell me that you really need to do some reading and learning about uses of LLCs, other legal entities, and this is not something a simple answer on any RE forum is going to provide you.
Lots of good books, courses, CDs, etc. on advantages of corporations and LLCs so I’d recommend you start in asap.
Re: LLC’s - Posted by John K Haslach, CPA, MST
Posted by John K Haslach, CPA, MST on October 24, 2005 at 15:55:06:
LLC’s are great tax vehicles for owning and renting real estate.
Because of self-employment taxes, they may not be the best for flipping.
Re: LLC’s - Posted by Dave
Posted by Dave on November 02, 2005 at 11:30:33:
John-
Could you elaborate on that last comment? I’ve done the reading but hadn’t heard that point before. Thanks so much,
Dave
Re: LLC’s - Posted by John K Haslach, CPA, MST
Posted by John K Haslach, CPA, MST on November 02, 2005 at 17:12:25:
If you are flipping properteis and it is considered by the IRS to be a trade or business (as opposed to capital gain), and your LLC is taxed as a partnership or a sole proprietorship, the income could be subject to self-employment tax. The tax can be as high as 15.2%