J.K. Lasser's Real Estate Investors Tax Edge by Scott M. Estill

Author:Scott M. Estill
Language: eng
Format: epub
Publisher: John Wiley & Sons, Ltd.
Published: 2010-08-09T16:00:00+00:00

Dealer Entity Structuring

As previously discussed, if you are a real estate dealer, you absolutely do not want to buy and sell in your own name as a sole proprietor. If you do, you will be forced to file a Schedule C for your real estate activities, which will increase your overall audit risk, increase your taxes, and provide no asset protection. Instead, there are two types of entity structures that will serve you best: the limited partnership and the corporation (in limited circumstances). As stated previously, you will want to separate your dealer properties from your investor properties and keep them in different entities. Investors usually hold their properties in a limited liability company, not in a limited partnership or corporation. Setting yourself up as an entity will also reduce your audit risk, since corporations and limited partnerships are audited much less frequently than sole proprietorships. Business entities and their advantages for real estate investors are discussed in more detail in Chapter 11.

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