A common question people ask when going into the real estate investment arena is...”Should I get an entity before buying a property?” Owning and holding properties in an entity can provide both tax benefits and some liability protection...however. They need to be formed and maintained properly or you can end up causing more harm than good. Tax returns, annual reports and records kept for the IRS should all need be done and will prove to be vital if Mr. Audit comes a ‘knockin. Some say that taxes are the biggest threat to someones wealth both long-term and short-term; insurance can be bought to minimize lawsuit issues. One strategy when considering entity useage is seperating assets by risk-class. It’s worth considering holding a couple of properties of similar risk/value in the same entity rather than an entity for each individual property. Last but not least, those who form entity’s do so for a fee....keeping fees/costs to a minimum is always good business. Just some ideas to consider, check with expert(s) before diving into a seminar-driven strategy.
Posted on: Mon, 23 Sep 2013 21:27:11 +0000
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