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Should You Form an LLC or S-Corp for Your Rental Properties?

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When you start investing in real estate, one of the biggest questions that comes up is: Should I form an LLC or S-Corp? The answer depends on your goals, but understanding the differences can help you make a smarter decision. 

The Case for an LLC 

An LLC (Limited Liability Company) is one of the most common structures for real estate investors. It’s flexible, simple to manage, and—most importantly—protects your personal assets. If something happens on the property, your personal savings or home aren’t at risk. 
Tax-wise, LLCs are typically treated as “pass-through” entities, meaning income and expenses flow directly to your personal tax return. 

When an S-Corp Might Make Sense 

S-Corps can be beneficial for investors running an active real estate business, such as flipping or short-term rentals. They may help reduce self-employment taxes, though they come with stricter compliance and payroll requirements. 

Why Your Structure Matters 

The right entity impacts how you’re taxed, how you can raise capital, and how easily you can sell or pass down properties. For many Los Angeles real estate investors, starting with an LLC and evolving to a different structure later makes sense. 

The key is to choose a setup that aligns with your risk level, number of properties, and long-term financial goals. 

Holmes & Associates helps real estate investors across Los Angeles and Long Beach set up the right entity structure for growth and tax efficiency. Schedule a call to discuss your options.

The Tax Advantages Every Real Estate Investor Should Know in 2025

If you own investment property—or you’re thinking about buying one—understanding how taxes impact your returns is key. The good news? Real estate continues to offer some of the best tax advantages available to investors, especially when you have a CPA who specializes in this area guiding you. 

1. Depreciation: A Hidden Benefit 

Depreciation allows you to deduct a portion of your property’s value each year, even if the property is appreciating in real life. This “paper loss” often offsets rental income, helping reduce your overall taxable income. 

2. Cost Segregation Studies 

For larger properties, a cost segregation study can accelerate depreciation by identifying which parts of a building (like electrical systems or flooring) can be depreciated faster. This can result in tens of thousands of dollars in upfront tax savings. 

3. The Power of the 1031 Exchange 

If you sell an investment property and buy another one, you can defer paying capital gains tax through a 1031 exchange. It’s a powerful tool for growing your portfolio—but it has strict timing rules, so planning ahead with your CPA is essential. 

4. Deductible Expenses 

Common deductions include property management fees, mortgage interest, repairs, and insurance. Even travel to check on your rental property can sometimes qualify. 

5. Entity Structuring for Protection and Efficiency 

Many investors form LLCs or partnerships to separate liability and optimize taxes. The right structure can protect personal assets while offering flexibility in how income is taxed. 

Real estate tax strategy isn’t one-size-fits-all, especially in California and Los Angeles markets. A CPA who specializes in real estate can help ensure you’re maximizing every opportunity and staying compliant. 

Ready to make your real estate investments work harder for you? Contact Holmes & Associates for a personalized tax strategy consultation. 

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2025 Year-End Tax Strategies for Real Estate Professionals

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As a real estate professional, you operate in one of the most tax-complex industries. With 2025 coming to a close, there’s still time to make moves that could significantly reduce your tax liability.  

Here are strategies to discuss with your CPA now:  

Section 179 and Bonus Depreciation  
If you’ve invested in property improvements or equipment, you may be able to deduct those costs immediately under Section 179 or bonus depreciation rules.  

Conduct a Cost Segregation Study  
If you own commercial or multi-family property, this study can help you accelerate depreciation and reduce taxable income.  

Track Passive vs. Active Income  
Your ability to deduct real estate losses depends on your status as a Real Estate Professional under the IRS guidelines. Make sure your hours and activities are documented.  

Harvest Capital Losses  
Selling underperforming assets before year-end can offset gains, reducing your overall tax burden.  

Plan Transaction Timing  
Closing a sale in January instead of December might shift your tax liability to the next year, giving you more time to plan.  

Smart tax strategy isn’t just about deductions—it’s about timing and alignment with your broader financial goals. Schedule a meeting with your CPA to map out your plan before the calendar flips.  

Are You Still Using the Right Business Entity for Your Taxes?

Your business structure isn’t just a legal formality — it has major tax consequences. With recent changes under the One Big Beautiful Bill Act (OBBBA), reviewing your business entity could save you thousands. 

What Changed Under OBBBA? 

The biggest headline: the 20% pass-through deduction is now permanently extended. This benefits S-Corps, partnerships, and certain LLCs — but not every business is eligible, and not all structures will benefit equally. 

Key Questions to Ask: 

  • Am I paying myself a reasonable salary as an S-Corp owner? 

  • Is a C-Corp more favorable based on my reinvestment or exit strategy? 

  • Do I have multiple income streams that could be better allocated across entities? 

  • Is my current setup optimized for California tax treatment? 

For Long Beach & SoCal Businesses 

Whether you're a solo consultant, multi-partner practice, or growing eCommerce brand, a structure review now — not during tax season — could position you for better long-term savings and risk management. 

Our team helps clients in Long Beach and Los Angeles navigate: 

  • Tax classification changes 

  • Owner distributions and salary strategy 

  • Multi-entity structuring 

  • Real estate holding company strategies 

Don’t guess. Let’s get strategic. Call 562-495-3331 or schedule a review with one of our business tax experts. 

Real Estate Tax Planning in 2025: What Investors in LA Need to Know

Smart Tax Strategies for Real Estate Investors

Real estate remains one of the most powerful paths to wealth, but it’s also one of the most complex when it comes to taxes. Whether you’re flipping, renting, or 1031 exchanging, having a strategic tax plan is essential. 

At Holmes & Associates, we work with real estate professionals throughout Los Angeles and Long Beach to ensure they’re maximizing their deductions and staying compliant. 

Key Considerations Before Year-End 

1. Bonus Depreciation is Changing 

2025 is one of your final chances to capitalize on elevated bonus depreciation. If you’ve placed assets in service this year, or plan to before year-end, you may be able to write off a substantial portion of those costs. 

Pro tip: Pairing bonus depreciation with a cost segregation study can significantly reduce your tax burden. 

2. Plan for Passive Activity Losses 

If your real estate activities are considered passive, your losses may be limited, unless you qualify as a real estate professional. Now is the time to assess your hours and documentation. 

3. Track Repairs vs. Improvements 

What you call a “repair” and what the IRS considers an “improvement” are two very different things. Misclassification is a common audit trigger and can drastically impact your deductions. 

Why Work With a Real Estate CPA in LA? 

Navigating tax law as a property investor in California comes with state-specific nuances, local property tax considerations, and multi-entity ownership strategies. Our team knows the landscape and can help you stay ahead. 

Ready to talk tax strategy? Call 562-495-3331 or book your free consult. 

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Mid-Year Tax Planning: Why Waiting Could Cost You

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It’s September — do you know where your tax strategy stands? 

If your tax plan is still on the back burner, now is the time to bring it front and center. At Holmes & Associates, CPAs, we specialize in proactive tax planning for business owners, real estate investors, and individuals throughout Long Beach and Los Angeles. The sooner we begin, the more opportunities we have to optimize your outcome. 

Why Mid-Year Matters 

By reviewing your tax position now — instead of in January or February — you can: 

  • Adjust estimated payments before Q4 

  • Identify missed deductions while there’s still time to correct them 

  • Plan major purchases or investments strategically for maximum tax benefit 

  • Avoid surprises when it’s time to file 

For Business Owners 

If you own an S-Corp, LLC, or Partnership, Q3 is ideal for re-evaluating your entity structure, retirement contributions, and owner compensation. With the pass-through deduction now permanent under the new tax law, there's even more incentive to ensure your setup is optimized. 

For Real Estate Investors 

Bonus depreciation is phasing out, but strategic moves before year-end can still lead to major savings. If you’re holding or managing property, now’s the time to: 

  • Run cost segregation studies 

  • Classify capital vs. repair expenses 

  • Project net income to reduce estimated tax stress 

Let’s Get Strategic 

Don’t settle for basic tax prep — go beyond the minimum. Holmes & Associates is a trusted Long Beach CPA firm with decades of experience helping clients reduce liability and grow smarter. 

📞 Call 562-495-3331 or schedule a consultation to build your 2025 strategy. 

 

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Best CPA for Commercial Real Estate in Los Angeles: Why Holmes & Associates is the Firm You Can Trust

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Commercial Real Estate Accounting, Commercial Real Estate CPA

Commercial real estate transactions involve large investments, complex financing structures, and detailed tax requirements. Whether you own office buildings, retail centers, multifamily properties, or industrial space, having a CPA with deep expertise in commercial real estate can make the difference between maximizing your returns and leaving money on the table. At Holmes & Associates, we specialize in helping Los Angeles commercial real estate owners and developers navigate tax strategies, improve cash flow, and optimize profitability.

Why Commercial Real Estate Owners Need a Specialized CPA

The Los Angeles commercial real estate market is highly competitive and heavily regulated. Owners and investors face issues like depreciation schedules, passive activity loss rules, 1031 exchanges, and partnership tax structures. A general accountant may not fully understand the nuances of commercial real estate taxation, but at Holmes & Associates, commercial property owners are our specialty. We know how to structure transactions and reporting to maximize deductions and long-term growth.

How We Help Commercial Real Estate Clients Succeed

At Holmes & Associates, we provide tailored tax and accounting services designed for commercial real estate investors, property management companies, and developers.

Tax Planning & Compliance

✔ Advanced tax planning strategies to minimize liabilities

✔ 1031 exchange consulting for large commercial property sales

✔ Cost segregation studies to accelerate depreciation

✔ Guidance on passive activity rules and real estate professional status

Accounting & Financial Reporting

✔ Comprehensive bookkeeping and financial reporting for commercial properties

✔ Cash flow projections and profitability analysis

✔ Partnership accounting and multi-entity consolidations

✔ QuickBooks and accounting system setup for commercial portfolios

Entity Structuring & Advisory

✔ Choosing the right structure (LLC, S-Corp, Partnership) for tax advantages

✔ Real estate syndication and joint venture tax considerations

✔ Partnership agreements and compliance support

Strategic Advisory for Commercial Investments

✔ ROI and IRR analysis for acquisitions and developments

✔ Tax planning for financing, refinancing, and dispositions

✔ Advisory for REITs, developers, and commercial real estate funds

What Sets Holmes & Associates Apart?

With more than 30 years of experience in Los Angeles, Holmes & Associates has a proven track record of helping commercial real estate owners and investors thrive. Our proactive approach ensures you’re not only compliant with tax laws but also strategically positioned for growth.

We offer a Free Tax Analysis and Consultation, where our team reviews your returns, books, and financials to uncover opportunities for tax savings and stronger profitability.

Schedule a Free Consultation Today

If you’re looking for the best CPA for commercial real estate in Los Angeles, Holmes & Associates is here to help. From tax strategies to financial planning, we partner with you to protect your investments and maximize your returns.

Call us at 562.495.3331 to schedule your free tax consultation today.

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Estate Planning for Business Owners – What to Know Before Year-End

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Estate planning isn’t only about passing on personal wealth. It’s a critical part of protecting your business legacy. As a business owner, your estate plan should answer one key question: What happens to the company if something happens to you?  

Here’s what to review before year-end:  

Create or Update Your Will  
Ensure your will addresses both personal and business assets. If you don’t have one, your estate, including your business, may be tied up in probate for months or even years.  

Set Up a Succession Plan  
Whether you want your children to take over or your partners to buy you out, a clear succession plan helps prevent disputes and ensures a smooth transition.  

Review Your Operating Agreement  
Does your current operating agreement cover ownership transfers in the event of death or incapacity? If not, it’s time for an update.  

Establish or Review Buy-Sell Agreements  
A buy-sell agreement outlines how business shares are sold or transferred, who has the right to buy them, and how they're valued. This protects both your family and your co-owners.  

Explore Estate Tax Strategies  
Business owners often exceed estate tax thresholds. Gifting shares, creating trusts, or using valuation discounts are just a few tools to explore with your CPA and estate attorney.  

An estate plan isn't static, it should evolve as your business grows. Take time before year-end to align your financial goals with your legacy. Doing so ensures your business continues in the hands you trust.