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 Should Real Estate be Placed Into a Corporation?
By Tom Masterson, President, Lake Tahoe Region.
One question that exchangers often ask is whether or not they should put their real estate into a corporation. The answer? You almost never want to put real estate in a corporation if you are holding it for investment purposes. LLC’s are fine.
Corporations have some attributes that make ownership of real estate in a corporation unfavorable:
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Shareholders generally cannot sell and exchange their property in the corporation and go their separate ways
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Gain on real estate held in a C-corporation is subject to a double-tax
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Shareholders that just want to distribute real estate out of a corporation generally won’t be able to without triggering the gain based on fair market value at the time of the distribution
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Property held inside a corporation gets no step-up in basis upon death of the shareholder
If you have property you are thinking of putting into a corporation, please make sure you consult your tax advisor before doing so.
Tom Masterson is President of the Lake Tahoe Regional office, newly opened in Incline Village, NV. Tom has over 27 years experience in leadership roles at large corporations. Contact Tom at tmasterson@summit1031.com or 775-833-1031
read Tom's bio
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