Structuring Investment Properties: Navigating LLC Taxation & Connecticut’s PET Changes
Real estate investors often use Limited Liability Companies (LLCs) to hold investment properties for liability protection, tax efficiency, and estate planning. However, taxation rules—both federal and state—can significantly impact how an LLC operates financially.
Exploring Tax Elections: The Role of Form 8832
LLCs are typically taxed as pass-through entities, meaning profits and losses flow to individual members’ tax returns. However, an LLC can file Form 8832 to elect corporate taxation, allowing the business to:
- Retain earnings within the LLC rather than distributing profits to members immediately.
- Take advantage of corporate tax rates, which may be beneficial for high-income investors.
- Structure ownership more flexibly, making it easier to reinvest in properties.
For real estate investors, this election is not always necessary, but it may offer strategic benefits depending on their financial goals.
Connecticut Taxation vs. Federal Treatment
While Form 8832 changes how an LLC is taxed federally, Connecticut has its own taxation rules that may not align with IRS classifications. One major consideration is Connecticut’s Pass-Through Entity Tax (PET).
Previously, Connecticut required pass-through LLCs to pay a 6.99% tax at the entity level, regardless of how they were taxed federally. However, as of 2024, LLCs can opt out of PET, allowing individual members to handle taxes instead.
How PET Opt-Out Could Benefit Investors
Some real estate investors may choose to opt out of PET due to:
- Lower individual tax rates—LLC owners in lower tax brackets might pay less by handling taxes personally.
- Multi-state investments—PET credits may not be recognized outside Connecticut, making it harder to offset taxes in other jurisdictions.
- Cash flow flexibility—Keeping funds within the LLC rather than paying tax at the entity level could benefit reinvestment strategies.
On the other hand, opting in to PET could be useful for investors looking to simplify tax filings and claim state tax credits.
Finding the Right Approach for Your Investment Strategy
LLC structuring isn’t a one-size-fits-all decision—each investor’s situation is unique. While these tax elections and state regulations offer potential advantages, consulting a tax professional ensures compliance and financial optimization.
📩 Let’s connect and explore how we can build your investment strategy together!
As a realtor specializing in investment properties, I help investors navigate real estate decisions that align with their business structure and long-term goals. Whether you’re looking for new investment opportunities, guidance on real estate transactions, or strategies for managing your portfolio, I’m here to help.
Facebook
X
Pinterest
Copy Link
Opendoor’s AI Flop: Your Agent is Still Your Best Bet
Don’t Toss Your Agent Just Yet: Opendoor’s Settlement Underscores the Enduring Value of Human Expertise in Real Estate Facebook X Linkedin WEST HARTFORD, CT – June 17, 2025 – For years, companies like Opendoor have positioned themselves as the future of real estate, wielding the power of AI to disrupt traditional methods. Their promise: accurately […]
Is Your House Feeling the Pinch? CPI, PPI & The Profit Squeeze on Homes
The Squeeze is Real: How Latest CPI & PPI Reads are Tightening the Screws on the Housing Market Facebook X Linkedin The economic headlines have been buzzing with the latest Consumer Price Index (CPI) and Producer Price Index (PPI) reports. While these numbers might seem abstract, they have very real and significant implications for our […]
Florida’s Gold Play: A Challenge to the Dollar?
Florida Greenlights Gold & Silver: Is the U.S. Dollar’s Dominance Being Challenged From Within? (Hold My Fiat, Says Florida!) Facebook X Linkedin Picture this: You’re at the checkout, happily swiping your card, when suddenly, the cashier pauses. “Do you have… a gold doubloon?” While not quite yet a daily occurrence, Florida just took a shiny […]
Birthday Dinner Insights: Repurposing Historic CT Homes
The Hopkins Inn Beyond the Residential Flip: Unlocking the Untapped Potential of Large Connecticut Properties Even during a family birthday dinner, the real estate mind, it seems, never truly clocks out. This past weekend, celebrating my brother at the iconic Hopkins Inn in Warren, CT, offered a profound lesson in property value that extends far […]
Market Momentum: Are Stocks Overheating or Just Gaining Steam?
Connecticut Real Estate: How Current Market Momentum Could Impact Buyers & Sellers Facebook X Linkedin About this Chart The chart tracks the SPDR S&P 500 ETF’s proximity to its 52-week volume-weighted average price (VWAP) (%) from 1999 to 2023. The vertical axis represents the percentage deviation from the VWAP, ranging between -30% to +24%, while […]
Where REALTOR could be helpful when Buying or Selling your Home
Realtors bring a wealth of value to the table for both buyers and sellers in real estate transactions. Here’s a breakdown of the key areas where their expertise and services make a significant difference: For Sellers: Pricing Expertise: Realtors have in-depth knowledge of the local market and can provide accurate and timely data analysis to […]
Zombie Mortgages in Connecticut: A Looming Threat?
Zombie Mortgages in Connecticut: What Every Homeowner (and Future Homeowner) Needs to Know As your local West Hartford Realtor, I’m committed to keeping you informed about all aspects of the housing market – the exciting opportunities and the potential pitfalls. Lately, a chilling term has been circulating: “zombie mortgages.” It might sound like a plot […]
© 2025 MoxiWorks
© CENTURY 21 2023 - 2024. All rights reserved. CENTURY 21®, C21® and the CENTURY 21 Logo are registered service marks owned by Century 21 Real Estate LLC. Franchisee Legal Entity Name (not the dba) fully supports the principles of the Fair Housing Act and the Equal Opportunity Act. Each franchise is independently owned and operated. Any services or products provided by independently owned and operated franchisees are not provided by, affiliated with, or related to Century 21 Real Estate LLC nor any of its affiliated companies.
