real estate taxes: Avoid "dealer" status

#1 04-04-2006, 07:38 AM

<johnmolinda[at]yahoo.com> wrote:

- quote -

> I have a question about real estate taxes. I understand
> that if you buy and flip houses, or buy and quickly sell
> many houses, the IRS may consider you a "real estate dealer"
> and tax you at ordinary income rates vs. long term cap gains
> rates, even if you hold the property for more than 366 days.
> Now, could you avoid being personally classified as a
> "dealer" if you formed an S-corp with its own tax ID # for
> each property you own? Let's say you want to purchase 5
> houses and sell them after 18 months. Each house is owned
> by a separate S-corp so would they all be separate sales and
> not 5 at one time, thus avoiding "dealer" status to you
> personally?

No.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

04-04-2006, 07:19 AM

<johnmolinda[at]yahoo.com> wrote

- quote -

> I have a question about real estate taxes. I understand
> that if you buy and flip houses, or buy and quickly sell
> many houses, the IRS may consider you a "real estate dealer"
> and tax you at ordinary income rates vs. long term cap gains
> rates, even if you hold the property for more than 366 days.
> Now, could you avoid being personally classified as a
> "dealer" if you formed an S-corp with its own tax ID # for
> each property you own? Let's say you want to purchase 5
> houses and sell them after 18 months. Each house is owned
> by a separate S-corp so would they all be separate sales and
> not 5 at one time, thus avoiding "dealer" status to you
> personally?

Ummm......if the "business" of the corporation(s) is to buy,
build, renovate, and sell houses then the gains or profits
are taxed at ordinary rates.

You haven't solved a whole lot, but generated a huge legal
and accounting/tax prep bill.

--
Paul Thomas, CPA
paulthomascpapc[at]bellsouth.net

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

#-1 04-03-2006, 04:14 AM

I have a question about real estate taxes. I understand
that if you buy and flip houses, or buy and quickly sell
many houses, the IRS may consider you a "real estate dealer"
and tax you at ordinary income rates vs. long term cap gains
rates, even if you hold the property for more than 366 days.

Now, could you avoid being personally classified as a
"dealer" if you formed an S-corp with its own tax ID # for
each property you own? Let's say you want to purchase 5
houses and sell them after 18 months. Each house is owned
by a separate S-corp so would they all be separate sales and
not 5 at one time, thus avoiding "dealer" status to you
personally?

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

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