-- Answers to Questions About Real Estate Law
Money and real estate news you can use everyday

Real Estate Lawyer
Question of the Week
Tip of the Week
Recommended Books
Contact Sam

Incorporation and Rental Property


Ask the Real Estate Lawyer: Real Estate Law Q&A

By Ilyce R. Glink and Samuel J. Tamkin

Summary: What are the advantages of putting rental property into a solely-owned corporation? Can incorporation somehow help pay down a mortgage faster? Ilyce Glink and Sam Tamkin provide real estate advice to a reader whose accountant recommends incorporation.

Q. Last year I purchased a home that is presently rented. I have been paying down the mortgage and want to be mortgage-free within 8 years. My accountant convinced me to quit claim the property to my solely-owned corporation.

He says that if I hold the property inside my corporation, I could pay down mortgage, collect rent, pay insurance premiums and real estate taxes with untaxed funds.

What are the ramifications of doing what he proposed down the road?
(article continues below useful links)

A: Itís hard to second guess what your accountant had in mind when he suggested that you transfer your rental property into your corporation. He may be trying to protect your assets by having your rental property be held by a corporation.

When you own property in a corporation, an owner may shield himself or herself from various kinds of personal liabilities and to a degree there is wisdom in the transfer proposed by your accountant.

You did not mention whether your accountant set up your corporation in such a way for tax purposes that the tax liabilities and gains from the corporation flow directly to your personal tax return. Depending on how many properties you own and what business you are in, your accountant may be trying to create a business for you in which you may be entitled to greater tax benefits by holding the property in a corporation.

Since you donít seem to completely understand what your accountant has proposed, you should talk to another accountant or real estate attorney for a second opinion. And, you should ask both your accountant and attorney all of the questions you have relating to future tax benefits or problems of having your corporation own the property rather than you personally.

Samuel J. Tamkin is a Chicago-based real estate attorney. Ilyce R. Glinkís latest book is 50 Ilyce R. Glinkís latest book is The REAL U Guide to Bank Accounts and Credit Cards. If you have questions for them, write: Real Estate Matters Syndicate, PO Box 366, Glencoe, IL 60022 or contact them through Ilyceís website




RSS Feeds

RSS 0.91 Feed
RSS 1.0 Feed
RSS 2.0 Feed

Home Buying   Using Attorneys to Buy a Home - Earnest Money - Quitclaim Deeds - Easements - Seller Misreprensation - New Construction - Buying with Partners - Home Inspections - Seller Problems - Agent Issues
Home Selling    Using Attorneys to Sell a Home - Seller Disclosure laws - Title Problems - Buyer Problems - Real Estate Agent Issues - Tax Considerations
Home Ownership   Neighbor Problems - Seller Misrepresentation And Fraud Issues - Problems In a Condominium Development - Problems Around The House - New Construction Issues - Subdividing Land
Home Renovation   Architect Issues - Contractor Issues - Problems With Contractors - Inspection Issues - Certificate Of Occupancy - Municipal Inspections - Punch List Issues - Financing Issues - Installment Contracts
Real Estate  
Loan Application Problems - Refinancing Issues - Paying Off An Old Loan - Credit Problems - Seller Recommended Lender - Prepaying A Loan - Prepayment Penalties - Predatory Lenders
1031 Exchanges - Financing Investment Properties - Landlord and Tenant Issues - Partnership and Company Considerations - Tax Considerations - Subdividing Land
Contact Us | Sitemap | Terms of Use | Copyright ©2001-2005. ThinkGlink Inc. All rights reserved.
Reproduction of material from any pages without written permission is strictly prohibited.
Site design by Walker Sands Communications