Ready to save $10k-$50k in taxes this year? Book a call here:
► https://taxstrategy365.com/pod-app
In this episode, Ryan Bakke breaks down the key differences between LLCs and S Corporations—and why putting your rental real estate in an S Corp could cost you thousands in taxes. While S Corps are great for service-based businesses, Ryan walks through three major tax traps for real estate investors who use them. He also shares his recommended entity structure for those running both passive rental portfolios and active real estate businesses. If you’re a real estate investor or advisor trying to optimize your tax strategy, this episode is essential listening.
Timestamps:
00:00:00 – Intro: When an LLC beats an S Corp for real estate
00:00:37 – Key differences: Tax treatment, liability, and ownership flexibility
00:01:44 – Why S Corps are popular for service businesses (and when they work)
00:02:29 – How an S Corp can save $9,000/year in self-employment tax
00:03:43 – Why those savings don’t translate to real estate investing
00:04:12 – S Corp disaster #1: Losing depreciation deductions
00:05:40 – S Corp disaster #2: Refinance triggers a taxable event
00:07:28 – What happens when you move property from an S Corp to personal name
00:08:25 – S Corp disaster #3: Paying self-employment tax on passive income
00:09:26 – When S Corps do make sense (flipping, development, active real estate)
00:10:08 – Ryan’s recommended entity structure: Active vs. Passive buckets
00:10:29 – Benefits of using LLCs for rentals: Depreciation, 1031s, flexibility
00:11:11 – Recap: Avoiding tax nightmares with the right structure
Want me to answer your real estate questions? Come to my next Ask Me Anything Q&A:
► https://taxstrategy365.com/pod-ama
Let's connect!
► Instagram: https://www.instagram.com/ryanbakkecpa/
► LinkedIn: https://www.linkedin.com/in/ryanbakkecpa/
► Twitter: https://twitter.com/RyanBakkeCPA
► Facebook: https://www.facebook.com/ryanbakkecpa
► TikTok: https://www.tiktok.com/@ryanbakkecpa
*None of this is meant to be specific investment advice, it's for entertainment purposes only.
