There is still the ancillary tax benefit of having a corporation vs not. I'm certain that one's tax basis is reduced significantly by running income and expenses through an LLC vs personally. IMHO one should carry real estate in an entity for the tax benefits AND legal protection but if shaky about the legal protection the merit of the tax benefits alone should be enough to persuade anyone considering to use an entity to hold real estate or not. Am I off the mark on this?
Here's some data I retrieved regarding tax benefits
Four ways that an LLC is taxed. Here are the common reasons why one would choose each type of taxation:
As a sole proprietorship – when the business has one owner.
-To own real estate rental property
-For a business that has passive investment income such as stocks, bonds and mutual funds.
As a partnership – when the business has two or more owners.
-To own real estate rental property
-For a business has passive investment income such as stocks, bonds and mutual funds.
As a C corporation
-For financial privacy to keep business income from appearing on one’s personal tax returns.
-For an individual or family with high medical expenses
As an S corporation
-To operate an active business.
-To save the 15.3% self employment tax (consisting of Social Security and Medicare) on distributions to the shareholders.
I thing this speaks to the topic as to why one may want to eventually hold property in an entity or deed property to an entity if not initially purchased with an entity.
