Should I form an LLC or a Chapter S corp for my business purchase of a rental building, Which is better for tax purposes?

ANSWER

The BIDaWIZ Team's Answer:

Generally speaking, it is better to form an LLC that is taxed as either a partnership or single member LLC than a S Corporation for real estate purposes. Do you have other partners involved with this investment? Below are reasons why an LLC offers greater benefits than an S Corporation for real estate purposes: 1) Ability to pass through more losses - LLC members are allowed to add the amount of the mortgage to their basis for the purpose of computing a loss, which is not applicable in an S Corporation 2) Flexible income allocation - Income and losses can be allocated disproportionately among owners in an LLC. In an S Corporation, income and loss are assigned to each shareholder strictly based on their pro-rata share of ownership. 3) Flexible shareholder requirements - In an LLC, anyone can be a shareholder and the # isn't restricted. In an S Corp, the shareholders must be US citizens or permanent residents and can't exceed 100. Your Question 4) More legal protections - The LLC offers greater protections from lawsuits from creditors and tenants because of the charging order 5) Moving properties - It's also easier to move properties within an LLC without facing tax consequences than it is with an S Corporation.