Using Private Investor (Parents) for First BRRRR Deal

[Andrew Pettit]

Good afternoon BB,

I ask this question yesterday but I just want some further clarification, here is what my CPA sent me in response. Please let me know what you think, thanks BB.

Andrew,

You could elect Subchapter S-Corporation status for your real estate business, which means you would file both a personal tax return and S-Corp tax return. The income/loss from the S-Corp flows through to your personal tax return via a Form K-1. Electing S-Corp status would allow you to add your parents as shareholders, where they could “invest” in the corporation. However, there are higher costs to file as an S-Corp for both your tax returns and State fees. It would most likely not be worth it for you at this point.