Corporation for Wholesaling

If I want to start out doing wholesaling, should I create an s-corp or LLC?

if you are going to actually own the property at any time, I’d recommend yes. If you are not ever going to own it, then no.

I heard that if I do wholesaling and assign the deals to other investor, the IRS considers me to be a Real Estate Dealer which puts me in a pretty bad tax situation. I also get dinged with a self-employment tax since I’m working under my own name rather than another entity.

I’m not planning on keeping any of the properties until later in the future but for now I just want to wholesale the deals to other investors but at the same time, I want to have some sort of tax reduction.

Please advise on my options.


Just use a land trust to flip them. You’re not buying and selling real property – you’re buying and selling beneficial interests in trusts – personal property, so you are not a dealer. You also never go on title or on any loan. You are invisible.

Da Wiz

well, you wouldn’t be a dealer, since you never own the property. But the income you make - call it commission, finders fee, whatever - is regular income, taxed at your marginal rates and subject to self employment taxes.

Wiz offers a good suggestion.

Operating in an S-corp, partnership does nothing to help you unless the company can pay you a reasonable salary. Then an S-corp could save you some self employment taxes. C-corp rates plus personal tax again on distributions when you take cash out is about the same.

Keeping 50% after expenses is better than nothing. Taxes are always a “good” problem to have.


What is a land trust and what’s the procedure for using that in wholesaling? Do I need to hire a lawyer to do this and if so, how much does that usually cost? And how complicated is this?

My exit strategy for now is just to put a deal together and assign them to other investors.


I agree about your statement regarding taxes but it’s always good to try and not give Uncle Sam anymore than I have to, right? ;D

And when I am assigning the contract, does the tax get already taken out of the check that I receive or is this something that I have to take care of during tax time?

if you’re just assigning, then the income will go on a Sch C at year end and you’ll have to pay the taxes. or increase your regular job withholdings to cover it.