Co-Invest Tax Structures
Are there any effective tax structuring tips for co-investing in real estate deals that are better than others? This would be a deal by deal co-invest vs. a fund. I'm assuming the best way to go is setting up an LLC and co-investing through that, but wondering if there is anything else that I should be considering? I'm already getting a base salary, so I wouldn't likely be able to deduct work expenses through the LLC since I can already get reimbursement on that from the company.
An LLC isn’t a tax structure. You could elect to be taxed as a c-Corp, an s-Corp, or a sole proprietor.
S Coro and sole proprietor are pass thru e titles where you are not taxed at the corporate level, but only on a personal level, although you pay self employment tax as well.
There are tricks in structuring, such as if electing to be taxed as a c-Corp you pay the corporate tax rate on your income, but you can make loans to yourself on a tax free basis. The IRS hurdle is you need to make monthly payments or draft a promissory note from the corporation to you the person.
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