Hallandale, FL · Member since 2015 · 2 posts · 0 votes
Hi all - here is my situation. I am a 100% owner of an S-Corp for the last 2 years. I made some money in advertising. Now that is winding down, I am looking to get into real estate.
The funds are currently under the S-Corp bank account, as I haven't withdrawn much. So what I would like to do is to purchase a rental property all cash under the S-corp, then turn around and pull out cash through a line of credit of sorts. (and hopefully do it all over again). So my questions begin:
Would the lenders give a line of credit loan on a property owned by a S-Corp if I would personally guarantee it?
What are some other options - such as if I create an LLC as a partnership between myself and the S-Corp (i read this somewhere, but not sure of the logistics).
Investor and CPA · Arvada, CO · Member since 2015 · 2k+ posts · 3k+ votes
11y
A corporation - either S or C - is not a recommended entity to hold real estate in. Unless you structure things VERY carefully, the passive nature of the income is lost in a corporate structure, including favorable Capital Gains income.
Take a shareholder distribution from your S-Corp and move forward.
Realtor · Gallatin, TN · Member since 2009 · 292 posts · 164 votes
11y
Disclaimer: Not a tax accountant, nor do I play one on TV ...
Depending on when that income was accounted for, its probably already been taxed. Seeing as an S-Corp is a passthrough entity (via your Social), and assuming that income has already been taxed, I'd shut the S-Corp down, dissolve the corp, and transfer funds in to your personal account.
At that point ~ you have a much better shot of getting a loan/funding via going the personal route, over a failed (or no longer bringing income in) ~ advertising S-Corp.
I'd find a Local RE Accountant or CPA ~ Go over everything with them, and see what they may suggest :)
Investor and CPA · Arvada, CO · Member since 2015 · 2k+ posts · 3k+ votes
11y
A corporation - either S or C - is not a recommended entity to hold real estate in. Unless you structure things VERY carefully, the passive nature of the income is lost in a corporate structure, including favorable Capital Gains income.
Take a shareholder distribution from your S-Corp and move forward.