Author Topic: Benefits to purchasing stock via a LLC?  (Read 1157 times)

PAstash

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Benefits to purchasing stock via a LLC?
« on: March 26, 2017, 09:39:31 PM »
didn't know if this goes here or the real estate land lording section?

Two years ago I purchased a worst house in the best neighborhood type of situation. I renovated while living there. I paid off the property due to market conditions and the relatively small amount owed on the property.

Soon i'll be purchasing a home for myself and my family to live in in hopes to begin to rent this out. As I understand for tax purposes and to insolate yourself from liability you should almost always house your rental properties in a LLC. I would really like to tax advantage of some of the tax benefits of being a business owner.

So options from here...
1. I did well on the flip I could sell now and net about 40k. I could dump this into the market and forget all this nonsense.
2. try to give it a go as rental real estate (which was the original plan) however I did the renovations in mind with leaving myself a out which would be selling out right.
3. Hold the property. Appreciation was NOT my main play however due to the cost of reno and area it maybe my best play. Every property in the area is appreciating like crazy.
part 2a. So say I hold it open a LLC could I use cash overflow from the business to purchase indexes? I assume that money would be help inside the LLC would there by any tax advantages to this? Would there be any other advantages to doing this?
part 3a So I want to avoid the risk of a tenant destroying the property so I don't rent it would it still make sense to hold it in a LLC to attempt to take advantage of text benefits?

Anyone have any books on this subject? using real estate holding to help boost index holdings? Books on how to arrange LLCs to hold these things for tax benefits?

I am going to cross post this in the land lording section.

thanks all!

P.S. Haven't met such a fine group of people in all of my travels as this forum.

Telecaster

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Re: Benefits to purchasing stock via a LLC?
« Reply #1 on: March 29, 2017, 08:44:25 PM »

So options from here...
1. I did well on the flip I could sell now and net about 40k. I could dump this into the market and forget all this nonsense.
2. try to give it a go as rental real estate (which was the original plan) however I did the renovations in mind with leaving myself a out which would be selling out right.
3. Hold the property. Appreciation was NOT my main play however due to the cost of reno and area it maybe my best play. Every property in the area is appreciating like crazy.
part 2a. So say I hold it open a LLC could I use cash overflow from the business to purchase indexes? I assume that money would be help inside the LLC would there by any tax advantages to this? Would there be any other advantages to doing this?
part 3a So I want to avoid the risk of a tenant destroying the property so I don't rent it would it still make sense to hold it in a LLC to attempt to take advantage of text benefits?


Your post is a little disjointed, but I'll try to distill it.  Your listed options as far as I can tell are:

1. Sell it
2. Rent it
3. Hold it--I'm not quite sure you mean here.  I think you mean just keep the property and not rent it.  Is that right? 

Here's the way you calculate your options:  If the expected rate of return of renting is greater than the expected rate of return of market investing, then rent it.  Otherwise, sell it.

I can't image holding it and not renting it is a good option.

For federal tax purposes, an LLC is a disregarded entity.  That is, it doesn't make any difference for federal taxes.  The income flows through to your personal tax return.  It can make a difference if the LLC files as an S-Corp, AND you can show that some of the income is in the form of dividends from owning the business, as opposed to "income" you would normally get from being employed at that same business.   I suspect it would be hard to show any dividend income based on what you are describing. 

In other words, I don't think there is any tax benefit to what you are describing.  But there might be tax benefits in other areas you are overlooking.  An excellent book regarding taxes for landlords is:

http://store.nolo.com/products/every-landlords-tax-deduction-guide-dell.html