LLC or S Corp under new tax law
I and my wife have a small business that is registered in MA as an S-Corp, we have also a rental property. I am told that to protect ourselves it is better to register the rental property as LLC. I was wondering (particularly under the new tax law) which one of the following options is more advisable:
Transfer the ownership of the rental to the S-Corp (buy it from ourselves)
Change the S-Corp to LLC and then transfer the ownership of the rental to the LLC.
Keep S-Corp as it is and form an LLC for the rental property.
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Keeping the S-Corp as it is and forming an LLC for the rental property seems like the most advisable option. Rental properties are normally considered passive income and therefore not subject to self-employment tax. If you rent through an S-Corp, you will have to perform payroll and pay self-employment tax on it. This will increase your tax liability by converting passive income into earned income.
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