Forums: Discussions for entrepreneurs and small business.

My wife and I are thinking to rent out our house (Florida). We already found somebody willing to rent and we will be looking into buying another place for ourselves. The questions we have are:
1. should we rent as "owner" or should we form a company or something and rent it as such.
2. should we buy as "owner" or as a company

I would be curious on your opinion and maybe on the tax consequences. If you have some time to share your ideas I would appreciate it.

thanks :)
Attila

The tax consequences will be essentially the same, however I am always an advocate of forming a seperate entity.

Let me preface this by saying that I`m not an attorney, and that you should seek legal advice from a professional before taking any type of advice from me.

If it were me renting the property out, I`d form a corporation and let that entity own the house. If the "renter" injures himself, or his or her buddies come by and hurt themselves, then it`s highly likely that you could be liable since you own the place -- and if they sue you, your assets are at risks...

With a corporation, you limit your risks/assets.

Many real estate investors who own multiple properties will typically form multiple corporations.

For example... john doe owns 30 rentals... he may create 10 corporations, whereby each corporation may own 3 properties (30). That way, if someone sues him, all 30 properties aren`t at risk, but are limited to the 3 owned by that corporation.

Hope this makes sense.

Cartess



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