S Corp or LLC for Fix/Flip Properties??? - Posted by Fix/Flip Newbie

import · March 14, 2005, 7:32am

Posted by Fix/Flip Newbie on March 14, 2005 at 10:32:49:

I just received a response from another message board suggesting “For ultimate protection and privacy, use a combination of a Simple Land Trust and make the LLC the beneficiary.” Is this more of a tactic for protection or tax benefits? I’ve not heard of this and if anyone has experience or thoughts about this, it would also be greatly appreciated. Thank you.

import · March 14, 2005, 7:32am

Posted by Fix/Flip Newbie on March 14, 2005 at 08:32:53:

I’ve recently decided to make fix/flip properties my new career and bought my 1st home in Colorado and am looking for a few more for a total of 4-6 per year. I set up an LLC to protect myself, not thinking about tax implications, but my realtor suggested an S Corp stating that S Corps treat houses as inventory thus allowing to buy and sell them without paying capital gains taxes on the sale… Can anyone confirm/deny this and explain why or why not an S Corp is better than an LLC? Can anybody point me in the direction of a resource that talks more about corporate entities for real estate investors? Thank you.

import · April 3, 2005, 5:46pm

Re: S Corp or LLC for Fix/Flip Properties??? - Posted by Fred

Posted by Fred on April 03, 2005 at 17:46:33:

Try this link and see if this info works for you. http://www.creonline.com/real-estate-law/Bronchick/legal-120.html

import · March 19, 2005, 6:00am

Re: S Corp or LLC for Fix/Flip Properties??? - Posted by Lyal

Posted by Lyal on March 19, 2005 at 07:00:03:

FFN, I’m not an attorney so take this for what it’s worth…
There are a LOT of pieces to the puzzle that determine the best structure for your business to protect your assets and reduce your tax obligation. You need to talk to a local attorney that works with this stuff (pref a tax-attorney that understands all the ramifications) and explain your situation in detail.
IN GENERAL, it’s best to use an S corp for fix flip and an LLC for buy-hold (rentals). You CAN elect to have your LLC treated as an S corp. Talk to your tax advisor to see if this might help.
All the best, Lyal