Protecting Your Investments
Posted By admin on April 12, 2009
Thank you for revisiting you can still subscribe to my RSS feed. As Always Thank You for visiting!
In order to protect your real estate investment, you must understand the tax tribulations that can be encountered. You must first decide on the type of entity that you would like to form. Forming one or more of these entities listed below will protect your individual personal assets, so review this carefully and consult an attorney if the you are considering purchasing real estate and renting it out.
If the LLC (limited liability corporation) is the choice of you makes then the articles of organizations will have to be decide to include the shares of the partners, the exiting and entrance of partners, etc.
The LLC allows for pass-through taxation as its income is not taxed at the entity level; however, a tax return for the LLC must be completed. Any income or loss of the LLC as shown on the tax return is passed through to the owner(s). The owners, also called members, must then report the income or loss on their personal tax returns and pay any necessary tax.
As with corporations, the LLC legally exists as a separate entity from its owners. Therefore, the owners cannot typically be held personally responsible for the debts
and liabilities of the LLC.
The second type of entity that you may consider is a partnership. Partners operate a business together. As a partnership each person is liable for any negligence of either partner. By comparison, a limited partnership is an entity formed to raise capital for business or investment ventures in which the partners (except for the managing or general partner) will not be participating in the day-to-day activities of the partnership, and will only be “at risk” for their own investment in the partnership.
The third type of entity is a “C Corporation”. A “C” corporation which is taxed under Subchapter C of the Internal Revenue Code and is the default corporation formed by incorporating. A “C” corporation is a legal and tax entity by itself. It is similar to a person in that it has its own assets and its social security number, called a Federal Tax Identification Number. Like other businesses, a C corporation needs to have a license to do business in towns in which it has offices and may use an assumed name. A “C”corporation’s assets or ownership is easily transferred through sale of the assets or sale of stock.
The final entity is a “S Corporation”. A “S” corporation is a corporation which is taxed under Subchapter S of the Internal Revenue Code and must elect to do so shortly after the corporation is formed with the IRS. A corporation is a legal and tax entity by itself. It is similar to a person in that it has its own assets and its social security number, called a Federal Tax Identification Number. The shareholders of a corporation must agree to elect to be a S corporation shortly after incorporating. Like other businesses, a S corporation needs to have a license to do business in towns in which it has offices and may use an assumed name.
Another important thing that you must consider purchasing liability insurance. Liability insurance will protect your asset by protecting you from being held responsible for the other party’s damages.
Please consult an attorney to determine which entity is best for your situation, but above all protect yourself.
Originally posted 2008-12-03 21:37:02. Republished by Blog Post Promoter
Taylor-Brown's Related Post s' Related Posts - Property Tax Appeal Review (Video 1 of Section 1) The objective of the series of videos that follows in the next couple of days is an evaluation of the the findings of property tax appellate court. This evaluation is not a guarantee that you will be successful with your appeal for an assessment in your property taxes, but it......
- Benefits to Real Estate Investors Using 1031 Tax Deferred Exchanges According to Internal Revenue Code Section 1031, an investor can sell a property and reinvest the proceeds in a new property. The usage of the Section 1031 allows the investor to defer capital gain taxes when selling any property " held for investment purposes". There are many advantages to using the......
- Evaluation of Property Tax Appeal Findings Image by esagor via Flickr The objective of the series of videos that follows in the next couple of days is an evaluation of the the findings of property tax appellate court. This evaluation is not a guarantee that you will be successful with your appeal for an assessment in your......
- Real Estate Investing - Latest News Image by thinkpanama via FlickrThe latest news in real estate investing from around the blogosphere: Real Estate Investing, Real Estate Investment News, Investing ...Welcome to real estate web profits to get current news on real estate investing news, real estate investments news, investor websites news, investment news and all about......
- Commercial Real Estate Investing - Latest News Image by thinkpanama via FlickrThe latest news in commercial real estate investing from around the blogosphere: Buy Commercial Debt, Not Property, Zell Advises Investors - Real ...Speaking at the University of San Diego's 14th annual Real Estate Conference, the real estate and Tribune newspaper (NASDAQ:TRBCQ) tycoon sees great opportunity in......
- What Should I Do With My Tax Refund? If you are among the people who had too much taxes withheld and you are getting a refund, congrats. I...
- Getting A Tax Refund? 5 Smart Ways To Use It If you’ve already completed your tax return for 2009, you may find yourself among those lucky folks who will receive...
- New IRS Refund Scam Coming Soon to an Inbox near You Criminals that perpetrate fraud online are creative if nothing else. Whenever a new event happens that might cause someone to...
- Report a Tax Cheat for a Feel Good Reward Tax fraud and tax cheats - don't you hate them? I don't blog about making money online or selling stuff...
- 50+ Personal Finance, Investing, And Money Tweeps Worth Following Miranda writes for Bankling, a personal finance portal, which contains both a blog, and a tools section that contains resources...
About the author
[...] Protecting Your Investments - This article discusses the business entities that are available that are available for investors to protect their personal assets when buying and holding properties. [...]
[...] Protecting Your Investments - This article discusses the business entities that are available that are available for investors to protect their personal assets when buying and holding properties. [...]
[...] Protecting Your Investments - This article discusses the business entities that are available that are available for investors to protect their personal assets when buying and holding properties. [...]
I thought it was going to be some boring old post, but it really compensated for my time. I will post a link to this page on my blog. I am sure my visitors will find that very useful.
I totally love this blog!!! absolutely going to need to remember to put this on my bookmarks.
Generally I do not post on blogs, but I would like to say that this post really forced me to do so! really interesting article,Thanks,
Great information… thanks for your review and tutorial about how to comment. I think if we walk to other blog we must comment to give appreciate for owner..