I am a novice real estate investor who wonders should i incorporate before gaining properties?

i want to know if i will gain benefit by incorporating before i have any properties or should i wait??? by incorporating will i automatically enjoy benefits without owning any properties like tax benefits, etc????

The big advantage of an LLC is that you can deduct all of the relevant expenses at the tax level of the LLC, rather than on your personal Schedule C, which markedly reduces the likelihood that your income tax return will be audited. That is a big plus, as LLC returns are not often audited by the IRS.

There is another advantage of an LLC that no one mentioned that is especially imortant in California: if you want to buy a commercial property, get the seller to put the property into an LLC (of course, you are going to pay the costs for him to do that). Then when you buy the property, you actually buy the LLC and the property technically does not change hands, since it continues to be owned by the LLC. This is an absolutely hige advantage in California, where the property tax can only be increased by 2% per year after a property changes hands -- the property does not legally change hands, and the old tax base continues to apply. But if the property is sold, then there is a reappraisal for tax purposes, and the property tax goes up, sometimes by a very large amount, especially if the prior owner has held the property for a long period of time.

There is no reason to incorporate unless you are a very large real estate investor, and even if you control billions of dollars worth of property, it may still be better to function as an LLC.

People incorporate to protect themselves against PERSONAL LIABILITY. Taxes will be higher.

never ever incorporate on the first date, bt if you do make sure you were protection kk?

My dad and I both own rental real estate and I do both our taxes. My dad owns some of his property through an LLC. I own mine personally.

Real estate is the best tax dodge I know about, but owning it through an LLC (limited liability corporation) dosen't give you any additional tax benifit - as far as I know. It does however limit your liability (hence the name.)

As it was explained to me by my Dad's lawyer, your liability is limited because the company is is the owner, not you. If you lose a lawsuit and the liability is larger than the value of the corporation, you can just give the corporation to whoever sued you and keep your shorts. That is, if you didn't personally do something or fail to do something that makes you personally liable.

For this reason, investors with multiple properties have multiple LLCs so they can't loose everthing at once.

I rationalize not having LLCs this way:

I have 2 million dollars of liability insurance in my insurance polocies for each of my rentals. This covers me up to 2 million, but more importantly - in my mind- makes it my insurance company's job to defend me if I get sued. I have another 3 million in personal liability insurance through my home owner's policy. If I ever lose a suit too big for the protection from my insurance, then surely they could make a case for me being personally liable and pierce an LLC anyway. I don't like lawyers. I really don't want more paperwork. I procrastinate.

No. You don't need the sort of protection that incorporation buys you (that's what insurance is for), and you do need the tax advantages of individual ownership.

You can't get tax benefits if you aren't doing any business.

If you are unsure of what incorporating will do, then I would highly suggest you research the prospect of "investing" a little more.