Do You HAVE to Have a Business Structure for Your Real Estate?

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I talk about the real estate professional status a lot when it comes to tax planning.

Here’s how it works, if you have passive real estate investments (long term rentals) and you have a loss, that loss may or may not be deductible against other income.

If your adjusted gross income (AGI) is under $100,000, you can take up to $25,000 of losses against other income. If your AGI is over $150,000, you can’t take any loss against other income. Between $100K and $150K AGI, the amount that is deductible will phase out.

The exception is if you are a real estate professional.

I received this question regarding real estate professional status.

“For 2019 I will use the real estate professional status to manage my 7 rentals. Do I need an LLC or C corp?”

Those are actually two separate things. If you qualify as a real estate professional (REP), then you can take the losses. You don’t need to have a business structure for your REP business or, for that matter, for your real estate holdings.

But, you may want to use business structures for asset protection and tax savings reasons.

If you’re ready for more real estate strategies, then check out the blog at, coaching at or arrange for a private consultation with me. Contact Us.

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