2022 - 09/12 - Separating your business from its real estate

Does your business need real estate to conduct operations? Or does it hold property and put the title in its name? You may want to separate real estate ownership from the business. For example, C corporations treat real estate as they do other business assets. Expenses related to owning the assets are generally tax deductible in the year incurred. However, when the business sells real estate, the profits are taxed twice, at the corporate level and at the owner’s individual level when a distribution is made. But if the real estate ownership was transferred to a pass-through entity instead, the sale profit would be taxed only at the individual level. Contact us to determine the best approach.