- The
appreciation will result in a taxable
gain when the real estate is sold or otherwise exchanged. (excluding a
like-kind exchange).
If
depreciable real estate (building used in a business), the tax depreciation will
reduce the 'tax basis' of the real
estate. The gain will be the excess of the selling price over the 'tax basis'.
- A
regular ('C') corporations
does not enjoy the
preferred tax rate afforded an individual on a long term capital gain. When an
individual has a net long term capital gain, the current maximum tax rate is
15%. That's a very good rate when other income might be taxed at
35%.
- A
regular ('C') corporation runs the risk of
'double taxation'. The
gain on the sale of the real estate is taxed at the corporate level (35%).
When
the corporation pays the
dividend to the
shareholder, the
dividend is taxable to the
shareholder on their personal income tax return (maybe at 35% again).
Two taxes - one corporate, the
other individual.
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