USA Rental Property Corporation Taxes/protection etc.


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Hi guys. I read a few pages of the forum before registering and thought this might be the best place to ask this.

My wife and I are interested in buying real estate. We'll be buying properties and renting them out for an income as we age. We'd like to form a corporation to do this, then have the corp also pay most of our monthly expenses for vehicles, our personal property, etc. from the pre-tax dollars in the corporation.
Then we'll provide a dividend from time to time from the company as our income. My question is this:

What's the best form of company to do this? Is this still legal? It was in the 80's, but I've been out of the game for a while. Our goal is to gain a nice income while buying what we can pre-tax through the corporation instead of through personal funds.

Thanks!
 
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bklynboy

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Get a financial advisor and tax attorney here. Rules have been adjusted over time and yes there are some favorable treatments allowed but not the loopholes as in the 80's You need to understand what to expect from a seasoned pro. In any structure you can deduct costs of running that business but there are limits to how that impacts taxable income.
 
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Thanks JM. i really don't mind complicated, I just want to save as much money as possible so I have more to invest. Alpo during our retirement years just doesn't seem like a good plan. :)
 
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Crunchy, don't incorporate the professional fees and headache will get to you. I own multiple properties in my name. I have a few corporation for other businesses. So speaking from first hand experience. I plan to have my houses in retirement and pay the government what I owe each year as I do now on the income statement.

P.$. The only thing that is certain: Death & Taxes.
 
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Crunchy, don't incorporate the professional fees and headache will get to you. I own multiple properties in my name. I have a few corporation for other businesses. So speaking from first hand experience. I plan to have my houses in retirement and pay the government what I owe each year as I do now on the income statement.

P.$. The only thing that is certain: Death & Taxes.
The fee to incorporate is $25.00 so that's not a big deal. The tax liability though, that's huge on self employment income, and I get paid after taxes. Whereas the corporation would pay debtors before taxes. Do you see what I'm getting at here? I'd rather not waste money on Uncle Sam when I don't have to. They waste more on a tube of toothpaste than I do on hookers and blow.
 
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Hello Taco,
In the US, the simplest entity to form is an LLC (Limited Liability Company). Here in CA you can send in a one-page form, pay $70, and have your LLC id number back in 2 weeks. Then, you can get a Fed Tax-ID number online instantly. You're in business.
The only real advantage to a corporation is that you can create numerous anonymous investors. But corporations are a lot of paperwork to set up and later dissolve. Believe me, I've had to do it.
So, unless you are issuing stock, LLC is the way to go.
There may be special rules/entities for real estate. And each state in the US has special rules. But I would be very surprised if someone recommended that you incorporate. That would be (expensive) overkill.
 
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The fee to incorporate is $25.00 so that's not a big deal. The tax liability though, that's huge on self employment income, and I get paid after taxes. Whereas the corporation would pay debtors before taxes. Do you see what I'm getting at here? I'd rather not waste money on Uncle Sam when I don't have to. They waste more on a tube of toothpaste than I do on hookers and blow.
You're making sense.
 

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