MARK KOHLERMain Street Professionals, Main Street Professionals, Main Street Professionals, Main Street Professionals, Main Street Professionals, LLC · Owner at Main Street Professionals, LLC

Own a Rental Property? You'll Want this Tax Strategy

28 Oct 2025 · 0 min

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In this brief Q&A, Mark Kohler explains his "trifecta" strategy for structuring a construction and rental business to maximize tax efficiency. The core of the trifecta is an S corporation that operates the construction activities, wholly owned by a revocable living trust, which in turn files the owner's personal 1040 return. This setup allows the owner to receive a K‑1, save on FICA taxes, and channel cash‑flow from building and renting homes directly to the individual tax return. Kohler then addresses the idea of using a Roth IRA to fund an LLC that purchases or builds rental properties, emphasizing that while the IRA‑owned LLC can own the assets, the IRA holder cannot serve as the general contractor on those projects. The advice combines entity structuring, tax reporting, and compliance constraints for investors who are also contractors.

Looking at ways he could self build houses to rent within his ira. Could his IRA fund the builds and not be self? He's a general contractor.
You need to learn the trifecta, which is built on three steps. Your S corp, which is your construction company. And this is where all of your operations come. This is your Trust in your 1040 down at the bottom. If you don't have your revocable living trust, call the law firm right now. Our link to KQS lawyers is down below. Your trust owns your S Corp 100%. This is where you do your W2. You save on FICA and you get a K1 down to your 1040. Over here you build homes and rentals. On his asset side, he's building homes and renting them out and the cash flow is coming down here to his 1040. That's the trifecta. Now he wants to open a Roth ira. And this Roth ira, Mark, I wanted to open an LLC and go buy rentals or build rentals. You can do that all day long. Do it. But you cannot be the general contractor on these.
And I know you're going, oh damn, I better not do it,
dude. You know 10 other general contractors, hire one of them on a sweetheart deal because you're good friends to build the house for your Roth. Well, I can't build it as cheap. Who can cares? Your Roth is sucking wind at Fidelity in some stupid mutual fund. Even if your friend bills it for and you got to pay him a dime, you're going to make more money in your Roth even if you're not the builder. Get over it. Go out and keep building rentals in your own name. Real estate, professional pass through losses. You're loving it Cost seg. I know what you're doing. But your Roth can buy and build rentals all day long. Just don't be the gc. Pay someone to do it. You're still going to make it. That's how you're going to get real tax free wealth.