Real Estate Investment

[kross]

i am considering starting a real estate investment company in NC. one question i have is if i form as a corporation or LLC and the company goes bankrupt can they go after you personally. or if one of the investment properties is forclosed on can it affect your credit?

 

[HomeGuru]

Who is "they'> If it is the lender the answer is yes because all mortgage lenders require personal guarantees even on mortgage loans made to corporations or companies.

 

[J. Ducaine]

while entity is an issue for many reasons, in real estate (U.S.) the biggest problem with a corp is the doubld taxation on appreciated property while in your possession. If you buy something for 100k and sell it for 200k, then the corp will pay tax on the 100k gain. Then, upon distribution, all shareholders will pay tax on the dividend and the corp will be required to report 1099-DIV.

 

[HomeGuru]

while entity is an issue for many reasons, in real estate (U.S.) the biggest problem with a corp is the doubld taxation on appreciated property while in your possession. If you buy something for 100k and sell it for 200k, then the corp will pay tax on the 100k gain. Then, upon distribution, all shareholders will pay tax on the dividend and the corp will be required to report 1099-DIV.

My response: that's interesting. The writer posed a question on credit and exposure and not about taxes.

 

[J. Ducaine]

i think their question is answerd with your response. lets cover the basics: your maximum exposures encompass the mortgage debt, and threats to the building. you WILL have a personal guarantee (unless youre trump), and the building is covered by insurance. LLC = CORP regarding liability exposure. tax issues only remain to consider.

 

[HomeGuru]

i think their question is answerd with your response. lets cover the basics: your maximum exposures encompass the mortgage debt, and threats to the building. you WILL have a personal guarantee (unless youre trump), and the building is covered by insurance. LLC = CORP regarding liability exposure. tax issues only remain to consider.

My response: slowly you are getting somewhere.

 

[J. Ducaine]

i thought we fired you in another posting? please...you are dismissed. we no longer require your "services".

 

[HomeGuru]

i thought we fired you in another posting? please...you are dismissed. we no longer require your "services".

My response: J. Archane, you are in no position to be talking like that. Such will be your fate soon.