LLC?

[Alex Sanfilippo]

Hello, I hadn't given much thought about the type of business to register when starting in REI until I read this post by @Brandon Turner: https://www.biggerpockets.com/renewsblog/2016/02/2...

LLC just seemed like the right way to go, again, because I do not know much about REI Taxes. My wife started a business a year ago and went with an LLC so it seemed simple to me.

I was hoping to hear from some professionals on this forum with their best practices for how the company is registered.

Thanks!

[Travis Thornton]

Alex, while LLCs have become the preferred entity for real estate ownership, and they can be very simple for single owners if the formalities are respected (liability shield, but invisible for federal tax purposes) at a relatively low cost, it gets more complicated with partners and/or if you may use 1031 tax deferred exchanges as part of your exit from any properties. If you choose to do business under an LLC, you then have choices as to how you'd like to be taxed (corporate taxation vs. self-employed or partnership taxation). You would be well served by a little attorney and CPA time at the front end to design the best entity structure for your investment program.