Have questions about this video? Sign up for a free consultation to get your questions answered by the professionals. aba.link/tus

@michaelbland3740

2 жыл бұрын

Will this work if you have a mortgage on property in your personal name?

Awesome! Thanks!!!!

so interesting, this is incredible!!!

I just turned my first house into a rental, trying to figure out what I should be setting aside monthly from the rental income towards taxes? According to this video it seems there are some other options to avoid tax liabilities. I’m not fully understanding this video. I just opened an LLC and was going to put the house title into the name of the LLC and open a Trust. Any advise on best practices with my first rental from non novice property investors out there?

I can't think straight because my mind...just...uh. wow!!

That's exactly what I had plan to do with some personal assets as start new biz. I knew could do it but of course not all of the specifics of how it's done.

Figured out how it pays itself. The business gets a loan and buys house from you. you have the 500k now and pay rent to the business with the 500k you just got. This is if the house is payed off. Otherwise subtract what you owe from the 500k. You are basically taking something you own and changing hands so that you do not pay taxes on any money while keeping your property.

Great video!! Would the S-Corp that you used in your example provide asset protection?

Love this!!! Keep sharing that knowledge! #MiamiKid

good info

What if the home has a mtg? I have 3 homes two with mtg and one free and Clear . Can it only be done with just 1 property? Sorry it’s a bit confusing for me

This seems like a great strategy when your house doesn't have a mortgage attached to it. I wonder if a Land Trust could be used somewhere to jump that obstacle.

@ksalls02

7 жыл бұрын

This. can it be done?

Does one need an S-Corp, or could it be an LLC?

HoLee Cow! That's fantastic!

If my personal residence is financed thru a Va loan, do I refinance first to a conventional and then sell it to the s-Corp? Help

I’ve been watching all your videos thank you for the information. Does this strategy work if there is still mortgage

@ClintCoons

2 жыл бұрын

Yes but it is more complicated.

If your going to sell a residence for less than your basis, turn it into a VRBO for a while first. This allows you to take the loss on an IRS Form 4797 LOSS FROM SALE OF BUSINESS ASSET. This loss offsets all forms of income , including W2 income, so it it more useful than a capital loss. As with a capital loss, any unused amount carrie’s over into future years.

You are crazy smart

link would not allow full fill in of info

I need this!!! I have property that I own and probably not getting the tax breaks I should be getting!

@ClintCoons

2 жыл бұрын

If you would like a FREE 30-minute consultation, you can request one here - aba.link/30minSession

Clint, what is the purpose of asking for an Installment Sale, if you later ask to opt out of Installment Sale treatment? Could you please explain this? Thank you

@ClintCoons

3 жыл бұрын

I assume you are referring to selling your home to an entity you own. Opting out of the installment sale is key to recognizing all of the income in the year of sale so you will qualify for the section 121 exclusion. If you did not opt out then you would pay tax on the payments you make back to yourself over time.

I may be wrong but to avoid the lender accelerating the Note due to the sell of the property, one would first need to deed the property into a LT then sell the beneficial interest of the LT to your S-Corp on an installment sale. Clint: is this correct?

@onetwothree4148

5 жыл бұрын

If you notice, he started this example on a house he had owned for 15 years. I'm no expert, but I believe selling a mortgaged property to a land trust in this manner could be quite problematic.

What are the tax ramifications when you go to sell the property held in the scorp? (you have a video stating scorps are a bad idea). it would be great to see a side by side comparison of when to use and when not to use (and why).

@ClintCoons

Жыл бұрын

Good idea. I will put it into production. If you sell in an S-Corp generally speaking it is taxable to you on any gain on the property sale. I will discuss some nuances in the video.

@JSICycles

Жыл бұрын

Gain on the excess of sales price over your NEW basis after depreciation

@RezzyDocYT

Жыл бұрын

@@ClintCoons did this video ever come out? Loosely looked at your uploads since and may have over looked it.

Great videos and great didactic presentations! I moved out of my primary residence 3 month ago. I ran a home based business there for 20 years and now renting it to another similar business. If I sell the home in 3 years to the renters and do a 1031 exchange can I still have the 121 tax advantage or selling it to my S-Corp would be the only way to benefit from the 121 exclusion. Thank you for you answer.

@ClintCoons

4 жыл бұрын

If you sell the house in 3years then 1031 is your only option. If you want the 121 then I would sell it to the corporation now.

@GabrielaCSirbu

4 жыл бұрын

Real Estate Asset Protection Thank you for the prompt response. Your videos are extraordinary! Keep doing them. I’m a subscriber and have many friends subscribe. Best!

@alpinewhite

3 жыл бұрын

@@ClintCoons If Gabriela sells the house which she lived in for 2 out of the last 5 years, isn't IRS Code 121 still applicable? Meaning, she has to sell it before the 3-year mark since she would've lived there for the first 2 years out of the past 5 years.

In your example the actual property tax will be increased due to the sale to the corporation which you will pay$3600 per year more. Since the property tax is income deductible you are paying less federal tax due but make local county happy.

@yaakovibnrussell6475

5 жыл бұрын

This depends on the State. Not all states assess taxes based on the last sale or because of ownership changes. Many do regular "appraisals".. so the property you bought for 200K could easily be taxed at the 500K value already before you made the sale... V.s.V., or the property may only be valued at 300K, which would not change just because ownership changed. In Indiana, for instance, most counties do a yearly appraisal that is largely based on the homes statistics (SF, constuction type, room count, etc) in combination with "comps" of sales near the subject property.

@onetwothree4148

5 жыл бұрын

In most jurisdictions this sale will increase property tax assessment

What about S corp, doesnt the corp has to pay taxes as well? So if add up your personal tax for property rental plus corp tax, would it be almost the same amount if combined? 😕

@ClintCoons

4 жыл бұрын

S-Corporations are pass through entities and do not pay any federal tax

I suspect in California the property taxes would increase to the new 500k assessment- quite an increase

@JSICycles

Жыл бұрын

California is a financial soul crusher

nice content! what if you still owe mortgage on the house? will your lender let you sell it to S-corp?

@ClintCoons

Жыл бұрын

You sell it subject to the mortgage.

How about all the transaction costs of selling and the costs ofnsettingbup the corpotarion?

@ClintCoons

4 жыл бұрын

Good point. This assumes you have business. You would never set up a corporation just for this strategy because there would be no real business purpose for the corporation.

Does this work for a duplex or a quadraplex, if that’s your primary residence? Or just a SFH

@ClintCoons

3 жыл бұрын

If you won the quadraplex and you live in on of the units it will work.

Any particular reason you recommended to put the to-be rental home in S-Corp. I thought it will be more beneficial to put it in a normal LLC

@ClintCoons

9 ай бұрын

This is a specific strategy for selling your residence and the tax status of the entity is important. A normal LLC is perfect if you have an existing rental or you are not looking to accomplish what I stated in the video.

Would the property have to be zoned commercial to be able to sell it to your s corp?

@ClintCoons

2 жыл бұрын

Not at all. The commercial would come into play when you are looking to obtain a loan in the name of the company.

Wouldn’t your property taxes double?

gold

this sounds great. Can i still sell my house to my own corporation IF i bought my house initially through the fha loan?

@ClintCoons

2 жыл бұрын

Yes but the lender might accelerate if they discover the sale. Maybe use a pocket deed on the sale.

Sounds great, but where do you get the money to pay off the existing loan?

@ClintCoons

2 жыл бұрын

Buy it subject to the existing loan.

Great video! What if I am still paying the mortgage and I did not live in that house for 2 years but for 18 months? Does it work even then?

@ClintCoons

3 жыл бұрын

You can turn it into a rental without the sale to an entity. Also you would want to see at least 300k or more in gain before considering using this strategy. You need to live in he property for 2 out of the last 5 years to take advantage of 121.

@fseifudd

3 жыл бұрын

@@ClintCoons Thank you so much. I could not live in that for 2 years unfortunately. Just 18 months. I got laid off and had to move to another city but I kept it. Its a great rental and that part of Houston is booming.

Thank you for the video Clint. Question, will the S-Corp pay higher property tax as the base went from 200K to 500K?

@Salty4eva

5 жыл бұрын

Exactly what I was wondering

@emjohtrader9128

5 жыл бұрын

no because even before you sold it to the corp it was still worth 500k, 200k is what it was worth 15yrs ago

@onetwothree4148

5 жыл бұрын

Sell price can absolutely effect real estate tax assessment, when your taxing body reassess the property.

@IRSHelpMichaelPlaksEAHouston

5 жыл бұрын

Property taxes have nothing to do with your tax basis. They are based on the local county assessment which can be revised every year and can also be protested. So, this house could be assessed at $100k, $300k or $500k today. If a sale is publicly recorded, it can trigger a re-assessment by your county collector, depending on their policies and procedures. One other caveat: your local property taxes will go up in either case, because you will lose your homestead exemption.

@gildardomagallon

4 жыл бұрын

depends on your state and county

Hi, can I get legal advice in the youtoob comments section? hahaha, anyway, I'm interested in how property tax fits in... especially since we're now capped at $10k!

Explain this to me like a 5th grader... it was very complicated.

Isn't the Cost Basis for calculating depreciation the Fair Market Value of the property at the time of conversion from personal residence to rental property? So in your example, it would just be 500K without the need to pay the transfer tax. I thought the Cost Basis for calculating the capital gains tax purposes would be the 200k plus any capital improvements.

@JSICycles

Жыл бұрын

Cost basis is $500k cost basis paid to you by SCorp. Treat it like a business down the street, not as yourself

I have two concerns about this: 1. Property taxes will now be 2.5 times per your example. In California, we have Prop 13 so my tax basis is low if I don't sell. 2. Depreciation is only on the structure, right? Land is what appreciates. So, a piece of property which appreciated from $200k to $500k has the same depreciation regardless of whether it was bought at $200k or $500k. Am I missing something? Thanks again.

@ClintCoons

3 жыл бұрын

The transfer of property into an entity wholly owned by you (in this case your Corporation) is exempt - " _Transfers between an individual or individuals and a legal entity or between legal entities, such as a cotenancy to a partnership, or a partnership to a corporation, that results solely in a change in the method of holding title to the real property and in which proportional ownership interests of the transferors and the transferees, whether represented by stock, partnership interest, or otherwise, in each and every piece of real property transferred, remains the same after the transfer_ " Your depreciation is based on your cost basis in the property I.e., what you paid for the house minus the value of the land. If the house appreciates from 500k to 1 mm then your basis will increase in the hands of your corporation buyer for purposes of the transaction. Yes the value of the land will go up but so does the structure. If you look at your property taxes you will note these are separately stated e.g., land value 300k Structure 700k. The 700k is what you can depreciate. Further, when you sell your basis has been stepped up so you minimize taxes.

@scottsissom4882

3 жыл бұрын

@@ClintCoons Would you please cite the quote you have above? Actually just found it: REVENUE AND TAXATION CODE - RTC DIVISION 1. PROPERTY TAXATION [50 - 5911] ( Division 1 enacted by Stats. 1939, Ch. 154. ) PART 0.5. IMPLEMENTATION OF ARTICLE XIII A OF THE CALIFORNIA CONSTITUTION [50 - 100.96] ( Part 0.5 added by Stats. 1979, Ch. 242. ) CHAPTER 2. Change in Ownership and Purchase [60 - 69.5] ( Chapter 2 added by Stats. 1979, Ch. 242. ) 62. (2)

@scottsissom4882

3 жыл бұрын

​@@ClintCoons - devils advocate- wouldn't the increase in stated value constitute something other than "that results solely in a change in the method of holding title to the real property"?

@ClintCoons

3 жыл бұрын

@@scottsissom4882 To be clear this is a CA-specific question. Yes, you might have an issue with your property value being reassessed for Prop 13 issue depending on how you complete the PCOR.

@JSICycles

Жыл бұрын

Why would appreciation of a house be only to land? Per square foot valuations increase for inflation of building materials to build similar. Just look at improvements value changes on a tax bill

Clint, I live in Florida with a Homestead Exemption. Would I lose my homestead exemption tax saving as well as asset protection as well as my home equity loan loan?

@ClintCoons

2 жыл бұрын

Yes if you follow this strategy.

@JSICycles

Жыл бұрын

Yes of course you’re not going be able to live in it

Can you sell properties from a trust (which I am the trustee) to corporations?

@ClintCoons

4 жыл бұрын

Absolutely if the trust give the trustee the power of sale.

Hi Clint, I am already a member of Anderson. I need someone to help me strategize. I have never been told those tricks. Is Kelly Allison not supposed to review and help optimize my portfolio?

@ClintCoons

Жыл бұрын

Claire are you looking to rent out your residence? I will have my assistant Deborah Lewis (dlewis@andersonadvisors.com) reach out to set up a call with me.

Hello , if I bought the house for 150k 40 years ago, and now I start renting it out and now the house value is at 950K? Do I use the current value of 950K or150K for depreciation when filing tax? I have never done depreciation on the house when I lived there. Thanks so much for your help.

@ClintCoons

5 ай бұрын

It would be your cost basis (what you paid plus improvements)

What happens when selling the home to the business if you’ve only owned for a year?

@ClintCoons

2 жыл бұрын

No gain deferral

Can you do Toronto?

@ClintCoons

2 жыл бұрын

No we do not set up entities in Canada.

Oh man, we moved from our residence 4 years ago, and have been renting it out. We should have done this.

@ClintCoons

3 жыл бұрын

Do you have the property in an LLC for protection?

@dougp7934

3 жыл бұрын

@@ClintCoons no, I do not. I looked into it, but it seems there are different perspectives on whether it’s necessary. But maybe I should go ahead and do it.

@boogathon

2 жыл бұрын

@@dougp7934 Do it.

This only works when selling to a corporation? There is no way of making this work with an LLC taxed as a partnership?

@ClintCoons

Жыл бұрын

Not it will not.

how would this system work if I'm still paying mortgage on the house?

@carlos-ee6vv

5 жыл бұрын

I guess it doesn't.

@gildardomagallon

4 жыл бұрын

thats my question. you are now paying a 500K mortgage but receiving them on the other end and are paying whatever was left on your original mortgage . now sure what he is trying to do. he is trying to not pay taxes on the gain of the house but not actually get rid of the property. You still have to pay the new mortgage he makes no sense.

@andrew5576

4 жыл бұрын

gildardomagallon the s Corp is receiving 20k in rental income and is paying you 15k in mortgage payments. So since you’re not being taxed on the 300k gain on the value of your house you are essentially moving 15k of profits to you tax free every year until you reach the 500k that you sold the house for.

@ddubsr5886

4 жыл бұрын

Andrew Holcombe has nobody heard of a due on sale clause? If you have a mortgage on the house you need to pay the lender before it transfers to your corporation

@Ronald199831

3 жыл бұрын

​@@ddubsr5886 instead of transferring straight into LLC, use a land trust, it protects the real estate and the due on sale clause

Hey Clint! What ramifications are there (if any) if a buyer wanted to purchase a property but offers to give seller $100k outside of escrow and get a loan for the balance for the purpose of having lower property taxes for the buyer?

@ClintCoons

3 жыл бұрын

Not sure but this would be considered fraudulent if caught because you are attesting that the sale price is XX through escrow but in reality it is XXXX.

Can you do this with fha

@ClintCoons

Жыл бұрын

Yes - you are selling it subject to the existing mortgage.

Call we sell our house to our llc?

would of been better to sell to a partnership or LLC taxed as a partnership?

@anfanifinancialllc199

Ай бұрын

It’s a related Party transaction. It won’t have the same effect.

Section 121 is for married couples only I think or am I wrong. I'm not married and rent two rooms in my house.

@anfanifinancialllc199

Ай бұрын

No it’s not. It just goes from a 500k exclusion down to 250k when single.

Does this strategy work if selling to LLC?

@ClintCoons

Жыл бұрын

It does provided the LLC is taxed appropriately.

What if I have 7 houses that i turned from primary to Rental property??/

@ClintCoons

Жыл бұрын

Great way to build a portfolio. Each of the properties can be depreciated.

Why S corporation specifically? why not C corporation? Second question- can i rent that property from my S corporation in this example?

@ClintCoons

3 жыл бұрын

You need the flow through tax treatment and it is an investment - property not a flip. Yes you will rent the property from the S-Corporation.

Can I do this in NC?

@ClintCoons

2 жыл бұрын

Yes

What option do I have with this strategy, if I already turned my house into a rental? Can I still sell it to my S-Corp?

@ClintCoons

4 жыл бұрын

It depends on when you converted it to a rental. Did you make the conversion within the past 2 years?

@joshbenjamins

4 жыл бұрын

Real Estate Asset Protection my oldest rental property started in 2002. The most recent one started being a rental in 2012.

Why s-Corp and not disregarded LLC?

@ClintCoons

3 жыл бұрын

You need a different tax payer. A disregarded entity would not meet the definition.

When you have the S-Corp, Do I have to hire someone as a manager ?

@ClintCoons

3 жыл бұрын

No but you will be an employee of the S-Corporation. If you are using an LLC treated as an S-Corp then you are most likely the manager of your LLC.

@FudanTeam

2 ай бұрын

@@ClintCoons wouldnt you have to pay employee taxes on the income?

So does the rental income now get taxed in the s corp every year

@ClintCoons

2 жыл бұрын

Yes

@hypent500

2 жыл бұрын

@@ClintCoons is it possible to pay zero tax on s corp rental income

What if the house value is under water. Will this still work ?

@jtmfam90

4 жыл бұрын

It depends on if a renter will pay enough to cover the mortgage.

@gildardomagallon

4 жыл бұрын

@@jtmfam90 which in this example is yourself lol

Is this this an available option for 2022?

@ClintCoons

2 жыл бұрын

Yes but speak with a knowledgable professional.

Still have to charge AFR on the installment.

@ClintCoons

4 жыл бұрын

Correct

Doesn't the sale have to be an arm's length transaction?

@ClintCoons

4 жыл бұрын

Yes meaning you have to make sure the terms of the sale are reasonable.

@grantfischerable

3 жыл бұрын

@@ClintCoons Thank you for your reply. Block Advisors (after escalation) told me the IRS would flag a transaction like this because it's not an arm's length transaction, and I was advised not to do so. Thanks again,

Hello,can this strategy be used in greece?

@onetwothree4148

5 жыл бұрын

People pay taxes in Greece?

@gildardomagallon

4 жыл бұрын

i thought you guys already paid like 90% income tax lol

Clint, would this strategy work if an LLC is used instead of an S Corp?

@ClintCoons

Жыл бұрын

Yes but have the LLC treated as a corp for tax purposes.

@retiretovallarta2944

Жыл бұрын

@@ClintCoons Would the property be subject to capital gains tax if it was moved out of the LLC (because it was taxed as an S Corp) even if not sold?

@ClintCoons

Жыл бұрын

@@retiretovallarta2944 Yes it would

@retiretovallarta2944

Жыл бұрын

Clint, I like this strategy... Because of increased depreciation, section 121 capital gains exclusion of primary residence. But I need the money from the sale to go buy another primary residence. Is there any similar strategy to get the full sales price at time of sale, instead of in installments?

Do you need to no mortgage on the home in order to sell your house to a corporation?

In this example, how do you pay off the balance of the mortgage when you sell for $500,000 on installments? Most banks want the balance of the loan when you sell, right?

@ClintCoons

3 жыл бұрын

Correct but the bank will not know unless you inform them you transferred your home to your entity.

@SuperLocoloco69

3 жыл бұрын

Yeah, and then when they find out you are screw. Hahahhaaha this seems fishy. Wait for the irs coming and knock in your door.

@boulderlist1094

2 жыл бұрын

@@ClintCoons Does that mean 1. I can never refinance, 2. S-Corp, the owner of the house, does Not pay the mortgage but someone, me, in the S-Corp will pay the mortgage? How to file the taxe return for the S-Corp?

@ClintCoons

2 жыл бұрын

@@boulderlist1094 You would need to find a bank willing to refi your loan in an LLC. 2. The S-corp will pay the mortgage. 3. The S-corp will file an 1120-S each year.

You made another video titled, "Why S-Corporations Are A Horrible Idea For Owning Rental Real Estate" so I'm a little confused as to why you would advocate selling your home to a s-corp to be used as a rental since in the other video, you said that was a horrible idea. Won't this cause all the problems you mentioned in that video in future? Can you please clarify?

@ClintCoons

2 жыл бұрын

Generally speaking that is correct but in some cases you might want to do it for the reason I provided in this video. Remember, planning is not a one size fits all approach and different strategies may require different solutions.

@om8652

2 жыл бұрын

@@ClintCoons when would it be bad to do rental property as an s-corp?

@ClintCoons

2 жыл бұрын

@@om8652 Almost always. I have a video covering this matter.

@nhcsuck42

2 жыл бұрын

Thank you for asking this excellent question!

...wow.

@ClintCoons

2 жыл бұрын

Pretty neat strategy huh!

so If I understand this right then 20k income -17k depreciation -15k installment payment =12k loss?

@IRSHelpMichaelPlaksEAHouston

5 жыл бұрын

No. Installment payment is not taxable to you personally and is not deductible to the S-corp

@dimesnake

4 жыл бұрын

Further to this: so you receive your rental income of $20k AND $15k instalments for 20 years? Or is it in lieu of?

What are the preconditions before using this strategy? 300k+ gain and the house has been paid off? Does the current loan servicer have to approve this transaction if the house is not paid off?

@ClintCoons

2 жыл бұрын

Definitely want to run the the numbers but the more gain the better. I would not notify the LSP of the transaction just begin making payments from the corporation.

@JSICycles

Жыл бұрын

Do a contract for deed between you and the s corp and don’t tell the mortgage company holding the loan. It’s often called a wrap note

Can you turn your home into a rental, put it in the LLC, then rent it to yourself?

@ClintCoons

2 жыл бұрын

Yes. I have a video on how to do that with your personal residence.

No,step up in basis in s corp!!!

Does the company need to be a c-Corp ? Can it be an LLC?

@ClintCoons

2 жыл бұрын

It can be an LLC taxed as a corporation

@tracychen36

2 жыл бұрын

@@ClintCoons the key is that the house has to be sold to an entity that will file tax separately ? If we have a series LLC, can I create a cell that can be taxed as a corporation?

@ClintCoons

2 жыл бұрын

@@tracychen36 Yes you can

What about real estate tax?

@ClintCoons

2 жыл бұрын

Yes you may be subject to state tax on the sale.

...And then what happens when/if the S-Corp sells the home?

@ClintCoons

3 жыл бұрын

It is taxed to the S-Corporaiton but the tax basis is increased so you have minimized the gain.

@jamessquare

3 жыл бұрын

Then all the appreciation you took over the years is computed and taxed as ordinary income. It is called depreciation recapture. There is no free lunch. You buy a house for one million dollars. You depreciate it over time to a basis of 100K. If you sell in the future for one million dollars, you will have to report 900K in ordinary income, to be taxed at a very high rate. The 900K is not even considered capital gain. All this depreciation gymnastics will have you singing the Willie Nelson IRS blues when you ultimately sell.

Is it worth losing Homestead Exemption?

@ClintCoons

Жыл бұрын

This is only to be considered if you are planning to turn your residence into a rental. Homestead protections only apply to a residence.

What about if I have a mortgage?

@ClintCoons

2 жыл бұрын

You would sell it "subject to" the mortgage.

@james80nyc

Жыл бұрын

What is the mortgage is through a va loan? Do I need to switch it to a conventional loan?

@JSICycles

Жыл бұрын

Keep mortgage and do a wrap note with contract for deed

Can i charge myself rent using this strategy ? We lived in the house for 13 years, mortgage recently paid off and the home is going to be put into an irrevocable trust to shield our assets. Since the " Trust " will own the home now can the trust charge us rent and apply these principles ?

@gildardomagallon

4 жыл бұрын

sounds possible since its irrevocable

@TheTruth-sd5ct

4 жыл бұрын

So you are paying rent to yourself, deduction out plus you must claim the income from the rent so incone in (equal the deductions) creating no tax benefit other than a hassle and shuffling money!

@JoeyHicks1

2 жыл бұрын

I have the same question. I want to sell my house to my corporation then keep living in it and rent from the corporation. Is this possible?? It seems plausible but…

Yes and your property taxes double, your insurance increases and you pay taxes on future increased value gains. There is more to it than that

@ClintCoons

4 жыл бұрын

You are correct, depending on the state your taxes could go up but I fail to follow the insurance increase. Would you not keep your property insured for its full value at all times? This is not a one size fits all approach and anyone considering it should look at the numbers to see if it makes sense in their situation.

@scottsissom4882

3 жыл бұрын

@@ClintCoons looks like tax in CA would not go up using the 62(a)(2) exclusion.

I am new and I want to know I am buying home through aggent She needs name on contract. How do I go about. Do put trustees name on contract as buyer. I have not formed a land trust yet. I have down loaded form from resourses. They have not asked for deposit. How do I pay the funds, from my personal accout and How do I receive rent payment in my personal account? How do I get your firm to help me?

@SuperLocoloco69

3 жыл бұрын

Hahahhahahaha i will call the irs on you

I rather do this same move under an LLC instead of an S corp

@IRSHelpMichaelPlaksEAHouston

5 жыл бұрын

Has to be an S-corp. Your LLC can elect to be taxed as an S-corp.

@goosecouple

4 жыл бұрын

@@IRSHelpMichaelPlaksEAHouston Will doing so increase the property tax?

@transitiontortf4850

4 жыл бұрын

@@goosecouple no, but it can increase insurance premiums. None of that matters compared to the potential benefit.

My property taxes were $1,200 a year. I got married and rented my property for 2 years. I forfeited my homestead exemption. After my divorce, I moved back in and my property value went way up...along with my taxes. My new bill? $4,800 a year $400 a month. I took the new homestead exemption of $50,000 and STILL had an huge increase in property taxes for life. Should of met with this man 1st first! Live and learn. I sold a year later for a nice profit, then... BAM!!! The real estate crash started THE NEXT MONTH. WHEW!!

This is nice but why would I ever want to put my house into a corporation? A corporation is for short term income like flips.

@ClintCoons

4 жыл бұрын

Interesting, Why do you write a corporation is only used for flips? A corporation can have many uses. It comes down to electing the proper tax status for the entity to ensure the flow through benefits associated with rental real estate.

@cybereditorpro4728

4 жыл бұрын

@@ClintCoons Yes, that is true but I am coming from an asset protection standpoint. How would I protect my house after being sold to my S corp, don't I always want long term real estate placed into an LLC? Secondly, can this tax rental strategy be done one house at a time or more than one up to the annual tax free limit?

@ClintCoons

4 жыл бұрын

@@cybereditorpro4728 Not sure what you mean b "protect it". The entity will protect you from liability associated with the property and vice versa. Typically the buying entity will be an LLC taxed as an S-Corp. This is a strategy for your personal residence thus you are limited how often you can use it per Section 121.

@cybereditorpro4728

4 жыл бұрын

@@ClintCoons I mean protect the house with the same benefits as being in an LLC but LLC taxed as S corp was not mentioned and just S corp. So this method can only be used one house at a time or on just my personal residence?

Can you sell it to an LLC?

@ClintCoons

2 жыл бұрын

If it is taxed as a S-corporation.

, love you guys information how can I get ahold of your guyses office number thank you

So basically you’re able to use the 121 500k capital gain exclusion again with S corp since it is a pass through entity? Is that why you’re saying to use an S corp? This is a pretty complicated strategy hahah

@ClintCoons

Жыл бұрын

No the s-corp is used because it is a separate taxpayer. The 121 flows through your 1040.

Then if your corporation is sued we don't know it may happen then all your property is gone.

@ClintCoons

3 жыл бұрын

Sure but what is the alternative. You are renting your house and with that comes risk. Someone can sue the corporation and take your house because they are hurt on the property. The alternative is to own it in your own name and risk losing the house and your other assets in the event of a lawsuit.

@freelancelife2131

3 жыл бұрын

@@ClintCoons Thank you for replying back but I'm confuse in your explanation you said to sell your house to your corporation. So your corporation own your house in papers legally, you don't have left asset as a house owner, because the company owns it. In the event of lawsuit corporation will be sued and all the assets of your corporation will be freeze and taken away. There is no possibility to own the house again because its freeze unless the corporation is selling back to the owners name but could that be possible?

@ClintCoons

3 жыл бұрын

@@freelancelife2131 You set up a new corporation for this strategy. You do not use an existing company. Does this make sense?

@freelancelife2131

3 жыл бұрын

@@ClintCoons yes it make sense now. Thank you

I think the idea with all these guys, like Rich Dad Poor Dad is to just emass tons of debt and then die. Because all that depreciation you "saved" has to be paid back once you sell the property. Is that not correct?

@ClintCoons

Жыл бұрын

Yes if you sell but if you use a 1031 of pass the asset to your children it will never be taxed.

@JSICycles

Жыл бұрын

The shares in the entity can be passed to heirs with stepped up basis. That would give you stepped up basis in SCorp to claim a loss with when property is sold at a taxable gain after your death. Talk to a good CPA before doing it

Wouldn't you just refinance? That is also tax free. Only reason I see selling it to your business is to offset personal debt to income.

@ClintCoons

3 жыл бұрын

A benefit of this strategy is to increase the tax basis of the property.

Can I sell my house to my LLC?

@ClintCoons

2 жыл бұрын

You can but it must be properly structured. Consult a CPA on how to set it up.

Yeah, but you take PROPERTY TAXES/SCHOOL TAXES completely out of the Picture.. If your Corp Making 15k in "Rent" this is barely covers those EXTORSION FEES.. Any way you flip or flap, Pirates always win.. ;)

How does the business get the 500k to buy the house ?

@MikeDSchnell

6 жыл бұрын

And then pays (thru rental income) the $500k plus interest back to you tax free. This is pretty awesome.

@carlosotero772

6 жыл бұрын

Thank you

@yaakovibnrussell6475

5 жыл бұрын

Your business should be properly funded in the first place. However, in this case, the "rent" a tenant pays is 20K, which should be enough to pay the 15K per year installments.

Interest rates hiking makes this less attractive

Three words.....RELATED PARTY TRANSACTION......No step up allowed. Do this and the IRS will come a knockin.

@saiyjin98

5 жыл бұрын

Thank you for this comment! I had no idea related party transactions were a thing before reading this.

@IRSHelpMichaelPlaksEAHouston

5 жыл бұрын

Related party transactions rules do not apply to this scenario. This strategy works if correctly implemented.