There’s no denying the profit margins. There are many benefits of owning rental real estate, which of course can be very lucrative, especially over the long haul. And it can help diversify your portfolio. However, navigating the process can be complicated, especially if you go into business with someone else. Following are some examples of the different legal structures available.
Limited Liability Company (LLC)
One of the most popular forms of business entities for purchasing investment real estate properties is a Limited Liability Company – or an LLC. An LLC offers liability protection and offers the maximum in tax benefits.
Do I Need Separate LLCs for Each Investment Property?
We suggest getting a separate LLC for each investment property, a move that helps maximize your asset protection.
What is an S Corporation?
The Internal Revenue Service (IRS) defines an S Corporation as “corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders.” And like an LLC, it protects the personal assets of its shareholders. Through an S Corporation, the business is able to avoid double taxation, since it’s not required to pay corporate income tax on the company’s profits.
What are Real Estate Investment Trusts (REITs)?
A REIT is a company or trust that owns and operates income-producing real estate properties. Investors or shareholders contribute to a REIT, which invests in a variety of commercial and residential properties, in a number of industries, including retail, resident, healthcare, warehouses, hotels, and others. REITs receive special tax considerations, which we can explain to you in great detail.
Purchasing real estate investment property can be complicated and takes a team of lawyers and, of course, experienced tax professionals. Our federally-licensed tax professionals help real estate investors get the most from their portfolios through careful planning and preparation.
Let us help you examine your tax options when it comes to finding the best entity for your rental real estate business. Call Advanced Tax Advisors at (954) 888-6941 for a complimentary consultation.