PROTECTING YOUR INVESTMENT


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We will now see how you can set up your entities in real estate property management for maximum protection, privacy, and minimum taxes.

So, let us go through the different types of entities available for buying, selling, holding, or renting your real estate property investment. Then we will put it together, break it down, and then put it back together again so you can understand how

the different entities work together. Therefore, where we start with different types of entities, such as:

  • Corporation, and by default most, when you file a corporation, most people file by default C corporation. Some people will file as an S corporation, a specific tax election.
  • The corporation makes it an S corporation.
  • We have an LLC. The LLC files need to be clarified in a multitude of ways.

We have a trust. A Limited Partnership.


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This is the picture of the types of entities, okay? So we’ll start with the basic one, a C corporation, which is called an ordinary corporation. It is formed by registering certain forms with the Secretary of State and going through some specific procedures, and then it files its annual tax return. It has owners we call
shareholders. It has officers, a president, a secretary, a treasurer, etc. If used properly, a C corporation can save you a lot of money, but there are negative tax consequences if misused. Either way, you do it whether it is a C corporation or an S corporation. They are both corporations and protect the owners, the shareholders, from liability for anything that goes wrong in the company business. So, a C corporation has shareholders and files a tax return, and then an S corporation also files a tax return. Still, the main difference between a C and an S corporation is that you can get double-taxed in a C corporation.
The Corporation can pay tax, and then if you take it out as a dividend to the shareholders, they are taxed again. You may have heard that before. The Corporation is bad, but properly used can save you money. An S corporation, on the other hand, files an informational tax return. A different one than a C Corp files, and then all of the income and expenses are passed through to the shareholders, as either a profit or a loss, is a net number.

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