When you want to distribute the property, unlike a multi-member LLC where gain would be deferred, you have built-in capital gains which will be recognized immediately upon distribution of the real estate to the shareholders.
There are other issues as well.
Thank you for your reply, could you explain that further, I'm new to this. Thanks.
The first paragraph is fairly simple; with an S corporation if the real estate is distributed to the shareholders and the real estate has appreciated, that gain will be immediately recognized and will have to be reported.
If the property is held in a multi-member LLC (defaulting as a partnership) then a distribution will not trigger gain until the property is actually sold.