When flipping houses, does it make sense to set up a corporation?
Answer by Wray Rives:
From a US tax perspective absolutely not. When you flip houses, you are generally creating taxable capital gains. Individuals can often pay a lower rate of tax on capital gains, but for a corporation capital gains are just another item of ordinary profit and are taxed as such. If you are flipping houses on a constant short term basis, this benefit is mitigated, but in my experience it is not uncommon for a house flipper to hold properties for more than the required 1 year to receive long term capital gain tax treatment.
If you are concerned about liability protection, I suggest you consider conducting your activity through an LLC and buy a really good insurance policy.