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Merlo, Accountant
Category: Tax
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Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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Would it be best to set up an LLC or an S-Corp for a rental

Resolved Question:

Would it be best to set up an LLC or an S-Corp for a rental properties business? Currently 5 properties are held.
Submitted: 7 years ago.
Category: Tax
Expert:  Merlo replied 7 years ago.
Hello lacey,

If your only business is holding rental properties, then an LLC would be the best set up.

S Corporations offer a better tax advantage for other types of business other than rental activiities. But since rental income is considered to be passive income, the tax advantages do not relly apply in that case.

An LLC involves much less paperwork and tax reporting requirements, and the tax comes out to be the same in either situation. Also with an S Corp you would be required to pay yourself a salary, which is not something you would typically do when only holding rental properties as an investment.

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Thank you lacey.

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