Expert: Brian Bocchieri - 11/25/2007

Question
Hello Brian,

I have a question regarding land development.  You see I am planning to build and sell some residential spec homes in the very soon future, and plan to eventually work my way up to bigger multi-dwelling buildings if everything goes right.  I have two things on my mind bothering me.  One is, would it be better to create a company and sell properties through it?  Or would it be a better idea to sell them privately, as I won't be selling anymore than 2 a year at first.  Is there anything else besides CGT that I need to look out for if I sell homes through a corporation?  Or would it be a wash and a corporation will provide me tax benefits that I could not take advantage of if I sold them as private investments.  Which would be money ahead?

Secondly, I was wondering which would be the best type of corporation for this activity, I was thinking S-Corporation, but am not quite sure.

I look forward to your answer, and Thank you ahead of time Brian.

Sincerely,
Justin

Answer
Hello Justin;  

I am glad to see you are thinking ahead.  
In my opinion you are always best served to use a corporation.  By doing this are are able to transfer as many expenses as legally possible to the corporation using pre tax dollars.  This will include any of your soft costs, meals with your team members (50% deductible) travel, office supplies / expense new computer ... education ... you see my point.
All these items and more will be the cost of doing business and deductible with pre tax money.  

As for which type of corporation is better you will need to check with a tax professional.   

A great source I have found is Drew Miles he is a tax attorney and specializes in asset protection and  corporate structure you can find him on the web.

Without knowing the whole situation I would not guess as to which structure would be better but I will say you cannot go wrong either way.

The corporate structure will save you tremendously on taxes and offer you a layer of protection.

I hope this helps,  please feel free to contact me should you need further assistance.  

PS. When you are ready to do your multi family construction deals we have some great financing programs for that.  We also have aggressive rates on purchase and or rehab financing.

Wishing you all the best

Brian Bocchieri