Moving Rental Properties to Corporation

[Syed A.]

Hello BP Folks,

I am new to the forum and need some advice at this juncture. I am computer engineer by profession and started the real estate investment around 2 years back and purchased 8 rental properties mostly townhouses in the Chicago suburb. Overall, I am doing property manager job for my personal properties as well. right now all the property title is on my personal name and i wants to take that out to corporation. I wants to run like a business since I wants to add 1 property every month in my portfolio.

I need advice & guidance from gurus & my seniors here? I opened the S-Corp around a year back and I am creating ALL the tenants leases on my s-corp and not on personal names. every property already has liability insurance. I have separate business accounts for real estate business. so its 100% separate entity to day to day transactions. All the incomes and expenses are running through business accounts.

In order to grow my business, what should I do next ? Should I transfer the property deeds to S-Corp or LLC and grow the company? I wants to address 2 major concerns. 1) Liability protection 2) Tax Savings both are important.

Issue #1: Eligibility for S Corporation Treatment: I have been told that Loss of eligibility can occur if the S corporation receives too much passive income. so in my case I am creating rental leases on my S-Corp name and not on my personal name. is that OK or my S-Corp is in trouble?

Issue #2: S-Corp VS LLC: My accountants are telling me that S-corp is better for tax purpose and my attorney is telling that LLC is better for liability protection. so who's correct here? As the argument goes, the S corporation can establish a salary or bonus for its stockholder-employees, and pay social security and medicare taxes only on the salary or bonus.

Issue #3: Exceptions to Passive Loss Rules, We are the high earner couple over $150K AGI so we are getting ZERO tax deductions for rental losses. There are only two exceptions to the passive loss ("PAL") rules:

a) qualify as a real estate professional ===> for that, someone needs to spend over 500 hours actively managing properties. whats the guidelines here?

b) Income is small enough that you can use the $25,000 annual rental loss allowance=>> NOT Applicable in our case, AGI is over $150K

Thank You for ALL your time and help.