first property
- Thread starter skiba
- Start date
- Joined
- Oct 7, 2007
- Messages
- 699
Nope..unless you have a reason to incorporate...don`t!
Unless you plan on acquiring say 10+ properties and making real estate your full time BUSINESS. There are no tax advantages to holding single family residential properties in a corp unless you have a good sized portfolio. Also banks will not finance a corp for rental properties unless the financials are very strong.
Unless you plan on acquiring say 10+ properties and making real estate your full time BUSINESS. There are no tax advantages to holding single family residential properties in a corp unless you have a good sized portfolio. Also banks will not finance a corp for rental properties unless the financials are very strong.
My understanding was that banks required new corps to have the loans also signed for personally so that the corporation did indeed own the property but you were on the hook for the loan if the corporate folded...
The only reason I like corporations is because they provide asset protection, as well in the long run their are good tax advantages even if you don`t plan on getting more then a handful..
All three accountants I`ve talked to on this issue have told me as a small business owner they don`t recommend anyone incorporate until they have a total income of around $70,000, that`s when the tax advantages usually start to outweigh the costs.
Remember even if the property only cashflows $100/month its probably paying off a couple grand in principal which you will have to pay income tax on, as well as the cashflow... So it`s in your interest to keep your tax rate as low as possible
The only reason I like corporations is because they provide asset protection, as well in the long run their are good tax advantages even if you don`t plan on getting more then a handful..
All three accountants I`ve talked to on this issue have told me as a small business owner they don`t recommend anyone incorporate until they have a total income of around $70,000, that`s when the tax advantages usually start to outweigh the costs.
Remember even if the property only cashflows $100/month its probably paying off a couple grand in principal which you will have to pay income tax on, as well as the cashflow... So it`s in your interest to keep your tax rate as low as possible
- Joined
- Sep 4, 2009
- Messages
- 100
Just looked into this myself. There is no tax advantage to incorporating unless you have more than 5 full time employees throughout the year. Then & only then will u qualify for the small business deduction. Actually if you are incorporated you will pay 4% higher taxes than personal. The advantage to incorporating a passive income business comes from the liability side.
QUOTE (jseib @ Sep 13 2009, 09:58 AM) My understanding was that banks required new corps to have the loans also signed for personally so that the corporation did indeed own the property but you were on the hook for the loan if the corporate folded... The only reason I like corporations is because they provide asset protection, as well in the long run their are good tax advantages even if you don`t plan on getting more then a handful.. All three accountants I`ve talked to on this issue have told me as a small business owner they don`t recommend anyone incorporate until they have a total income of around $70,000, that`s when the tax advantages usually start to outweigh the costs. Remember even if the property only cashflows $100/month its probably paying off a couple grand in principal which you will have to pay income tax on, as well as the cashflow... So it`s in your interest to keep your tax rate as low as possible
QUOTE (jseib @ Sep 13 2009, 09:58 AM) My understanding was that banks required new corps to have the loans also signed for personally so that the corporation did indeed own the property but you were on the hook for the loan if the corporate folded... The only reason I like corporations is because they provide asset protection, as well in the long run their are good tax advantages even if you don`t plan on getting more then a handful.. All three accountants I`ve talked to on this issue have told me as a small business owner they don`t recommend anyone incorporate until they have a total income of around $70,000, that`s when the tax advantages usually start to outweigh the costs. Remember even if the property only cashflows $100/month its probably paying off a couple grand in principal which you will have to pay income tax on, as well as the cashflow... So it`s in your interest to keep your tax rate as low as possible
- Joined
- Aug 30, 2007
- Messages
- 13,879
QUOTE (skiba @ Sep 12 2009, 08:27 PM)
is there any true benefit to starting a corporation and purchasing my first property under the corp. rather then as myself. I have read about people doing this for tax reasons...any thoughts?
read this here, on Pro`s and Con`s of creating a company for real estate holding:
http://myreinspace.com/public_forums/Real_Estate_Discussion/62-10292-54272-To_create_a_company_or_not.html#54272
is there any true benefit to starting a corporation and purchasing my first property under the corp. rather then as myself. I have read about people doing this for tax reasons...any thoughts?
read this here, on Pro`s and Con`s of creating a company for real estate holding:
http://myreinspace.com/public_forums/Real_Estate_Discussion/62-10292-54272-To_create_a_company_or_not.html#54272