Why do you presume someone is a tax cheat just because they use a corporation to buy/hold/rent back their home? Are you aware of a particular tax code provision that says this is not allowed?
It is perfectly legal to own rental property, and also perfectly legal to convert a residence into a rental property (there are rules about establishing your cost basis as the lesser of acquisition cost and FMV at the time of conversion, but assuming you follow the rules, there is no “cheating.”
The only difference is that the shareholder of the corporation is also the renter. As long as they are paying themselves Fair Market Value rent, what’s the difference???
Heck, if the corporation makes money, it has to pay taxes. Furthermore, the corporation cannot take advantage of the tax-free gain ($250K or $500K), and there are annual expenses involved (separate tax return, fees to establish and maintain the corporation).
So, it would only make sense to do in certain situations, namely, where the ownership expenses exceed FMV rent, and if values go down between establishing as a rental and eventual sale.
