In this video I discuss why passive income, such as buy and hold rental real estate property, should NOT be taxed as an S Corporation. The IRS classifies your income as either active or passive. If you are running an operational business such as a Real estate agent, physician, e-commerce store, then you are heavily involved in the day to day of the business and you’ll pay self-employment taxes and federal income taxes on your income.

When you are involved in passive activities such as rental real estate, that income is NOT subject to self-employment taxes. If you make the mistake of putting your rental income in an S Corporation…you’ll now be subjecting the rental income to the 15.3% in SE tax.

Take what you learn from this video and ask your legal or tax professional all of your specific questions. If you want to contact me, my information is below.

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This video was created for informational purposes and it is not to be construed as legal and tax advice specific to your unique situation.

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