LLC's - Which provides the most tax benefits?

[Josue Guerrero]

If I were to form an LLC with a partner, what would be the best route to take as far as tax benefits are concerned. Let's assume our strategy is to focus on the purchasing of distressed properties, fixing them up, and then renting them out, with the occasional flip every so often. Should we be elected to taxed as a partnership or as an S-corp, and why?

[Steven Hamilton II]

Don't do it. Unless you're ready to marry them. 

Consider an LLC Taxed as a partnership. Make sure you have EVERYTHING agreed upon and have covered every buyout situation. Consider life insurance for both partners to match buyout value, etc. Or a designed installment sale agreement to sell off someone's portion in case of death and heirs inherit that you may not get along with.

NEVER hold real estate long term in a corporation. Always LLC taxed as partnership or hold personally/Single member LLC.

The reason is double taxation and basis rules. Debt does not count as basis in a corporation.