New Investor: Form LLC elect S Corp tax status?

[Ashton R.]

Hi there!

Would it be beneficial for me to form an LLC and elect S Corp taxation status? My goal is to buy and hold investment properties but also become a licensed real estate agent to property manage others properties and build a large multi-faceted investment and property management firm.

My thought is I would benefit from S Corp status by saving on the self-employment tax ? I'm trying to set myself up for long-term success based on where I want to go with this but not sure how to get started.

I want to start investing now and manage my own properties but won't be able to manage other people's properties right away due to having to work under a broker in charge for a few years.

The catch: we are a military family due to get orders soon so it's hard to put roots down somewhere. Any advice is appreciated

[Michael Plaks]

@Ashton R.

What you're asking is an equivalent of selecting clothes for a baby that has not been conceived yet. You can buy a lot of cute dresses, and it will be twin boys. S-corporation helps in only very specific situations, and you have no way of predicting yours. In fact, it can hurt rather than help.

Also, it's pretty hard to set up a property management company when you're constantly on the move. 

In other words, I suggest you need a good plan first, and details much later. When you start, S-corporations are to be avoided, as a rule of thumb. 

When you choose a tax professional, the keys are understanding real estate and understanding special tax rules for the military. Very hard to find people who are experts in both.