There are several issues which might make the LP an unfavorable means to hold title to property:

1) Self employment Tax - since it is a pass-thru entity all income will be treated as salary. You can elect to be taxed as a corp however.

2) Filing fees - in many states they are as much as 100% more than the corp's. For example in Texas to file a corporation it costs $300 while a LP filing costs $700

3) Franchise taxes - there is some debate here but most of it is grounded in marketing efforts by speakers to appear 'unique' and 'informed'. The truth is that franshise taxes will apply if you earn more than $150K in the corp. In addition most states will soon be charging franchise taxes for LP's as well. In fact Texas will be charging them as early as 2006 if the new Texas Business Organizations Code revisions are adopted by the state legislature.

Most people go with a c-corp and do just fine. You should speak with an accountant and attorney in depth about what you plan to do and how you plan to do it because there always are exceptions.

Warmest Regards,

Darius M. Barazandeh, JD/MBA

NOTE: Any material found on this discussion forum or email with Mr. Barazandeh is not a substitute for detailed consultation with an attorney and does not create an attorney/client relationship. Information contained within this discussion forum is NOT intended to be, nor should it be taken by the reader as legal, financial or tax advice BUT are for educational purposes only. If the services of a real estate attorney are needed please email Mr. Barazandeh or another attorney to learn about becoming a legal client.