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I have a rental property (single family residential worth 300k) and need to know best way to manage liability risk. Should i transfer property to a dedicated LLC ? Is an S-Corp a better option from a tax prep perspective ?
Property is my only rental and is also located in Utah, where i reside.
I own my current home, with ~30% equity. I usually do my own taxes in turbotax but with rental and an LLC, that may change this year.
Can you provide an ETA on your answer ? Not sure how to log back in so please also send response toXXX@XXXXXX.XXX. Thx.
Rental is paid in full. Thought i sent this twice. Perhaps 3 is a charm.
Thank you for your patience.I am sorry that this was a bit longer than expected, I really did not see your past posts. The difference pertaining to to S-Corp and LLCs is based on whether or not you are seeking to grow the business entity later on. An S-Corp cannot own other businesses or be owned in turn, so if you are at some point considering obtaining more properties, placing them in other entities, and setting up a holding company, the S-Corp is not a good option. An S-Corp, like an LLC, has pass-through taxation, so you can pay taxes directly--there is no double-taxation involved. Generally an S-Corp has lower taxes than an LLC until about $200,000, where the LLC ends up having a more favorable tax basis. This is based on current regulations, however; the laws may change and so may the tax benefits. If the whole result is paying less taxes then the S-Corp is better option, but in terms of flexibility the LLC is the better solution.Good luck.
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