I have just recently aquired my first property, a 4100 sq. ft home in a very desirable area. The home is udergoing top to bottom renovations and I plan to have it on the market in about a year and move on to the next project. I have not spoke with a CPA yet but would appriciate anyones advice on weather or not I should incorperate or not for the tax advantages. Or does it make a diffrence?
Aren’t the carring cost for a year going to take a large chuck of your profits?
If you have another job it probably won’t make a difference.
When you start flipping several a month or the majority of your income is from rehabs then you need to do something.
Start out with a liability policy.
Thanks for the response Bud. I did not mention that I am owner occupying the home and am doing a large amout of the renovations myself.
My mortage company would only give me a 10 yr. note under a LLC. as opposed to a 30 yr. 103% finacing I recived buying the h
ome as a individual.
I just don’t know if I can get the tax break form some of the out of poket repairs I have already occured.( Tools, hardware, labor paid out, ect.) Yet if I incorperate the mortage company can ask for Payment in full. Any advice would be welcome by this 1st timer.
p.s. I do have a full time job
I think Bud is correct. At present, there’s no good reason to form an entity for this project. With you living in it, there’s little to no “business” asset to protect via business entity, because the asset itself is personal. In fact, I submit that co-mingling a personal residence with business properties would endanger the business properties. Insofar taxes are concerned, the vast majority of available tax breaks are available with OR without an entity. There are some important exceptions for flips, but I doubt any of them would apply to a personal residence.
John Hyre