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Young Entrepreneur Forums » General Business » General Business » Should I Incorporate?



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Old 06-02-2006, 10:14 PM   #1 (permalink)
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Should I Incorporate?
Im going to be buying one, maybe two condos and rent them out. Should I incorporate or just buy them under my name? I know for liability purposes I should incorporate but what tax advantages would I have? Also, how would my homeowners insurance rate vary? If anyone can give me some answers or point me in the right direction I would appreciate it. Thanks.
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Old 06-02-2006, 11:37 PM   #2 (permalink)
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Originally Posted by NewHorizons
Im going to be buying one, maybe two condos and rent them out. Should I incorporate or just buy them under my name? I know for liability purposes I should incorporate but what tax advantages would I have? Also, how would my homeowners insurance rate vary? If anyone can give me some answers or point me in the right direction I would appreciate it. Thanks.
No need to inc. just for this instance. You should purchase the condos personally. If you were to purchase a large development, then you'd definately want to do it under some form of legal corporate structure. I work heavily in real estate finance and I have only done small investment properties to individual borrowers rather that companies. I'm not certain on the tax advantages would be for going one way or the other.
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Old 06-03-2006, 12:53 AM   #3 (permalink)
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It also depends on what country you're in.

In Australia, I wouldn't incorporate unless there was significant financial risk or until I got to the point where I was making enough money to be able to make the change worth the fixed 40% tax rate they charge incorporated companies here

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Old 06-03-2006, 05:23 AM   #4 (permalink)
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Thanks for the info, I'm in the US by the way.
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Old 06-05-2006, 12:24 AM   #5 (permalink)
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Incorporating is important for limiting your liability and for tax purposes. I am not an accountant, and can't tell you to incorporate or not. We've got a good thread going on our forums about this subject http://forums.biggerpockets.com/viewtopic.php?t=248.

Incorporating is very easy through sites like LegalZoom and other online law providers, but the fees can add up.

FYI - Buying a good umbrella insurance policy can offer you the liability protection you're looking for and will be much cheaper then to incorporate.
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