Private Lender as Business Entity Considerations

[Greg P.]

Hi,

My apologies if this has been addressed before. If so, please "point" me in the right direction. Thanks!

What form of business entity do private lenders choose who lend from only their own funds? The loans would be from non-retirement funds for non-owner-occupied properties.

Normally, income from such loans would appear as interest income on one's personal tax return, but, especially with the Affordable Care Act, there might be tax advantages to forming a one-person C-Corp and drawing a salary, despite factors such as payroll taxes, the overhead from reporting and tax filing requirements, and double taxation when profits are distributed.

Interest income isn't compensation to the IRS, so if one only has interest income, one can't contribute to a 401k or IRA. Although different business entities can address this issue, it appears only a one-person C Corp can offer a stand-alone HRA (healthcare reimbursement arrangement) that reimburses one for both individual health insurance premiums and medical expenses.

Thanks for any input on this topic.