Tax, SDIRAs & Cost Segregation
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback
Updated over 5 years ago on . Most recent reply
Should I be an S-Corp for flipping?
Hello! We currently have three houses that we are in the process of flipping. I was wondering if I should file the form to make my LLC be taxed as an S-Corp? I see varying answers to this question. My main goal is to try to get out of paying the self employment tax. Any advice helps!
Most Popular Reply
#5 Tax, SDIRAs & Cost Segregation Contributor
- Accountant
- Atlanta, GA
- 1,762
- Votes |
- 1,982
- Posts
#5 Tax, SDIRAs & Cost Segregation Contributor
- Accountant
- Atlanta, GA
An S Corp can't get you out of paying SE taxes. Only a C Corp can do that. Although your effective tax rate will most likely be higher with a C Corp...AND you wouldn't be paying into SS. Whether that matters to you or not is another issue.
An S Corp is designed to minimize SE taxes based on "reasonable compensation", which will vary for each and every taxpayer. There is not a set percentage.
The decision is qualitative just as much as quantitative. Some people don't want to deal with the extra tax return and run payroll for an S Corp vs a Disregarded Entity/Sole Prop, even when material tax savings is involved.
Good for a discussion with your tax pro.