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Are You a California Resident?

Are You a California Resident?

Many people believe that as long as they are outside the state of California for six months and a day they are not residents of California. And thus don’t have to pay California’s high income taxes. But the state of California is both broke and arrogant. And they make the rules the way they want.

Design Your Asset Protection Plan

Design Your Asset Protection Plan

You design a lot of things in your life. The layout of your house, the flow of your business, the requirements on your children, and many more scenarios are all elements of conscious design. Asset protection is no different. There is an architecture, a cohesive...

Corporate Opportunities

Corporate Opportunities

Does the Rule Apply to Real Estate? If you invest in and/or syndicate real estate what are the duties to your investors? You owe them a duty of loyalty. But how far does that go? The issue of corporate opportunities is important. I wrote a whole chapter on it (from...

Why You Should Never Hold Real Estate in a C Corporation

loopholes of real estate 65

I once made the comment:

“Never hold real estate in a C corporation… and fire the advisor that even suggests such a thing.”

Many people asked, “Why not?” Well, there are three reasons.

Reason #1: Capital Gains Taxes Will be Higher When Selling

First, for tax reasons we don’t recommend that you ever hold real estate in the name of a C corporation.  Your C corporation will pay considerably more in capital gains when you try to sell that property than would a flow-through entity, such as an LLC.

Reason #2: Asset Protection is Not as Secure for Property Held in a Corporation in Most States

The second reason is if your C (or S) corporation is holding the property and you are sued personally, a judgment creditor (except with a Nevada corporation) may be able to reach your shares in the corporation and effectively take control of those shares and through them, control of the corporation and its assets. If properly structured, using Nevada and Wyoming LLCs and limited partnerships (LPs), you will have much better asset protection than with other entities. For these reasons we recommend that real estate be held in either an LLC or LP.

Reason #3: Transferring Property Out of a Corporation is Taxable

As well, transferring property out of a C or S corporation is a taxable event whereas it is not taxable in an LLC or LP. When it comes time to refinance, you will appreciate an LLC or LP.

However, you can have your corporation buy real estate. One method is to have your corporation pay rent for an office building which is owned by a separate LLC that you own.  The rent paid by the corporation is a tax deduction for the business and the income from the rent is offset by operating expenses as well as the phantom expense of depreciation.

loopholes of real estate 65For more information on this topic, please read my book Loopholes of Real Estate, which will teach you how to open up the tax loopholes available only to real estate investors and close the legal loopholes of unlimited personal liability. Click here to order it from RDA-Press.com.

 

Are You a California Resident?

Are You a California Resident?

Many people believe that as long as they are outside the state of California for six months and a day they are not residents of California. And thus don’t have to pay California’s high income taxes. But the state of California is both broke and arrogant. And they make the rules the way they want.

Design Your Asset Protection Plan

Design Your Asset Protection Plan

You design a lot of things in your life. The layout of your house, the flow of your business, the requirements on your children, and many more scenarios are all elements of conscious design. Asset protection is no different. There is an architecture, a cohesive...