All Forum Posts by: John Duston

@Jillian Ez

I'm hesitant to recommend incorporating as SoCal, especially Los Angeles appreciates so quickly that you'll have basis issues taking it out if the corp.

An LLC could be the starting point as you can elect to be taxed as a corporation ( whether S or C). If a corporation is applicable without knowing the details of your situation.

In California, we do have to pay an FTB tax of $800 a year.

@Erika Lopez

You don't need an LLC to start wholesaling deals as it is just a liability protection entity in the beginning ( can later use it to save in taxes with a S election but that's a different conversation). If you don't set up an LLC, definitely make sure you have good E&O insurance.

@Jack Von Kleeck

If you have to ask if you should talk to an attorney, you have to talk to an attorney.

Id also ask them about LLC vs joint venture. I've got some connections in FL and can ask them for attorney recommendations if you'd like.

Hi Ammon,

I'm not sure if I know any CPAs in Dallas but I could check.

Have you already started doing Fix and Flips?

One of the big items is that if you have a flipping businesses, it is taxed as a business and not as capital gains.

Hi Anthony,

I should know one of both in San Diego as I am just in Santa Barbra.

Are you looking for an attorney to set up entities? 

Can't really give advise on ROTH vs traditional without knowing in depth details such as current tax bracket, expected income, real estate plans, and age. I'd reach out to a CPA.

Hi Uri,

Easy part first, NO to S-Corp. It can create basis issues down the road.

The LLC is primary for legal protection as it will not save you money on taxes. It will actually cost you an additional $800 a year as you are a CA resident. (Plus extra tax prep fees)

Whether or not you put your property into an LLC depends on your risk tolerance, the equity in it, and insurance plan.

Hi Marco,

Answers to your questions:

-Is there any need or advantage to apply for a FEIN for the LLC ? Yes, you'll need an EIN for taxes. Its very easy to apply for with SS-4.

-I know I cannot open a bank account for the LLC without a FEIN....but I might as well just pay the property taxes via my own personal account I guess? See above. Having an LLC business bank account also makes accounting easier.

-Would we need to file tax returns for the LLC if we were to obtain a FEIN, even if there was no generated income, since it will only be a buy and hold deal? Yes, it will primary an informational return but you sill have to file.

-How do the property taxes get deducted if we were not applying for a FEIN? See above.

PS I'd recommend getting a lawyer to write the LLC agreement with you and your friends in the case that there are disagreements or someone's situation changes.

Hi Victor,

Bigger Pockets has a policy of no self promotion so that the forums so that they don't become taken over by it. Hence a lot of "DM me for referral"

I would recommend Wiley Urtez as an attorney. Like me he is in Santa Barbara so he can work with you (attorneys are licensed state by state and its important to have one in CA)

The LLC will just look like a partnership with two people. Sounds like you're really looking for a mortgage broker not a CPA for getting this deal and the financing together.

Depends on the amount of equity you have in each, state LLC costs, insurance, and your risk tolerance. No real way to answer that question without talking to a CPA, attorney and insurance broker because it varies so much person to person.