| Are there any disadvantages for an S Corporation to own a taxpayers primary residence?
There are 2 main disadvantages of using an S Corporation to buy a shareholders (taxpayer) principal residence. These are as follows;
1) According to a recent IRS Court Ruling, the shareholders of an S Corporation "cannot claim the home buyer credit on the purchase of a new residence." The Courts held that the tax credit can be claimed only on a home owned by an individual not a corporation
2) The S Corporation cannot exclude any of the gain on the sale of the home. The income tax exclusion of the gain of up to $500,000 of profit is restricted to only individual taxpayer's.
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