Would a c-corp work for someone “flipping houses” for tax benefits?
mrflip asked:
I am looking into the business of flipping houses, so after reading more into it I see that it is recommended to operate under a “c-corp”. After talking to a CPA they said it would make no sense as I would be double taxed, both on the corporate profit and my personal income from the corporation. Why is it that most real estate books recommend c-corps then for tax breaks on buying and selling houses?
I am looking into the business of flipping houses, so after reading more into it I see that it is recommended to operate under a “c-corp”. After talking to a CPA they said it would make no sense as I would be double taxed, both on the corporate profit and my personal income from the corporation. Why is it that most real estate books recommend c-corps then for tax breaks on buying and selling houses?
2 Responses to “Would a c-corp work for someone “flipping houses” for tax benefits?”
April 23rd, 2008 at 3:14 pm
Probably because most real estate books are not written by tax experts. Sadly, few of them are written by real estate experts either, but that’s another story.
You’ll pay higher tax rates in a C-Corp, plus there are no personal exemptions or deductions so the first dollar of profit is taxed. You will have to pay yourself a reasonable wage but any other funds you take out as dividends are taxed twice, once as income of the corp and again as taxable dividends to you.
April 25th, 2008 at 8:40 am
I would form a single member LLC. You won’t have to worry about the double taxation, and you won’t have to file a separate income tax return (at least for federal income tax purposes, some states might require a filing).
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