s-corp. vs. LLC

[kingster555]

I am thinking about buying rental properties. Can someone tell me what is better for flipping and or holding on for a couple of years and then selling. I was told if you flip properties you want to do it with and s-corp and under a year. However, if you sell properties over a year you should have an LLC. Is this right?

[William Bronchick (Expert R.E. Attorney)]

Generally speaking, an S corp won't hurt you either way, since profits in an S corp is pass through and you don't have an issue with dealer status (the main flipping "snafu"). The LLC is also pass-through, but should generally be avoided when the primary income of the company is ACTIVELY earned (dealer flipping, mortgage broker fees, real estate broker commissions, etc). These are just rules of thumb, and it is always a good idea to review what you do with a qualified tax professional.