25 Tax Tips for Real Estate Developers and Investors
25 Tax Tips for Real Estate Developers and Investors… that can help you manage your tax burden.
By John Michel Grant Thornton Real Estate Tax Services
1. Evaluate the form of any new business you begin. How your business is organized can have a major impact on the amount of taxes you pay. The selection of the entity to own and operate the real estate is extremely important. Generally available are the S Corporation, C Corporation, partnership, limited liability company and REIT. Each has advantages and disadvantages as well as traps for the unwary.
2. Understand your partnership or LLC agreement. Do you really understand your partnership or LLC operating agreement? Do you know if the allocations among members have “substantial economic effect”? Do you know what a qualified income offset provision is? Do you understand minimum gain? In real estate matters, operating agreements typically address these and other important tax issues. Chances are your agreement is written with such issues in mind.