Commercial Property LLC vs S-Corp?

Question

We have a commercial property and we have been filing Sch E. Now, We want to have the commercial property under either LLC or S-Corp. Which one is better as far as reducing or not paying capital gain when we decided to sell the property. I think with LLC your basis are same so you do not have to pay capital gain? What would you suggest? thanks

Answer 1

>>>>Which one is better as far as reducing or not paying capital gain when we decided to sell the property?<<<<

Neither. LLCs are disregarded entities at the federal level and S-Corp income flows through to owners basically the same way.

Nothing beyond exchanging for another property can postpone or eleminate taxes on the gains (and depreciation recapture) when you sell.

Answer 2

Never put real estate into a corporation (C or S) or an LLC taxed as a C or S corporation.

Neither the S corp nor LLC taxed as a partnership will result in lowering capital gains upon selling the property. However, there are special rules for recognizing gain on distributions from corporations. Partnerships do not have those rules.

Those rules can cause corporate real estate ownership to blow up in your face if you take the property out of the corporate name. Additionally, a stock sale of the corporation becomes harder because no one wants to buy the tax problem.

Answer 3

In my opinion this is not a "do it yourself" project. Talk to a CPA so he and she can look at your entire financial situation and help
you make the right choice.

Here's wish you success...