LLC vs S-Corp. What are the differences?

[Gerald Marshall]

I've been a landlord for about 5 years now and use the proceeds as income like most do in the beginning of their REI careers. The question is, whether to initiate a S-Corp or LLC for my passive income. My CPA recommends an S-Corp. Her reasoning is that a "S-Corp is where you want to be in the future, so start there". But, I hear and see so many who deal with Passive Income using just the LLC. What are the drawbacks from becoming a S-Corp. What are the benefits? Anyone else have this dilemma?

[Steven Hamilton II]

What @Daniel Hyman did not touch on is the most important part is that you do not want to hold rentals inside of any type of corporation.  If your accountant is suggesting an s-corp to hold rentals and passive activities they could very well be committing malpractice.

You run into major basis issues inside of a corporation that you don't have holding through a single member LLC that is not taxed as a corp. If you are holding the properties with a a spouse consider using an LLC Taxed as a partnership. Feel free to PM me if you'd like some qualified advice.