Real Estate Professional Status vs Real Estate as a Business

[Sam Haack]

Hi, so I am trying to figure out the answer to this question: how does investing in real estate with a "real estate professional" status compare to investing as investing with an entity and having a business (LLC) behind it? Do they have different tax advantages? I understand the difference between passive investor, active investor, and real estate professional in the eyes of the IRS, but does investing using an LLC give unique tax advantages too? Is this a fair comparison or question to ask? Any help separating out these two lines out thought would help greatly.

[Christopher Smith]

An LLC (I'll assume you are referring to a single member LLC where no election has been made to be taxed as a C or S corporation) confers no tax advantages, it's primarily intended to be a risk / liability mitigation / management tool. In fact the entity is disregarded from it's owner for Federal Income tax purposes.