Incorporating? Or something?

[Jaime Borbon]

Hello! So I'm doing some research on incorporating or maybe doing business as an LLC. As I gather info I thought I'd tap into the wealth of experience here. With that in mind... here's the story...

My parents own a 4 story walk up, 9 family apartment building in Queens NY. They've had it for over twenty years and have just kind of muddled their way through with the help of a shady accountant, who let them "keep more of their money".

Recently they tried to use their investment property to secure funding for another project and were denied by the bank as the property shows zero income "on paper". 

Meanwhile, they've grown a bit tired of running the place. I'm more than willing to step in and do the work for them. They would like to leave a stake in the business for all the children in the family. We'd also like to find a way to use the property to grow acquire more real estate investment property. 

Now that you're basically caught up, what would you suggest? Is forming a corporation a good way to move forward? LLC? Would that be a good starting point before moving forward and securing funding for acquiring property?

Suggestions, opinions and advice are all welcome. 

[Doris B.]

There are several issues here: 1) LLC is much easier than corporation! You can actually do all of the paperwork yourself from the government pages of your State. 2) In some cases though, a conversion from personal property to a corporation/LLC will cost you the local transfer tax. In Philly, I believe it is 4%. Find out what it would be for NY. 3) Please check the tax consequences if your parents were to gift their property to you (and siblings) prior to their passing. I checked it recently and found it to be a very bad idea. 4) Did you check if a 15 year/Home Equity Loan is possible? Might be easier to get than a regular mortgage. Best of luck!