I'm sure this has been discussed on here before, but I can't find it anywhere.
I have purchased a property under my name and fixed it up (not all the way/ was planning on rehabbing but realized I was running out of money). I now intend to rent it out but was guided to start an LLC to protect myself from a law suit.
It takes about 300 bucks to start an LLC but I need to know if/how I can sell the house to myself. No gains, no freaky numbers, just a way to protect my assets from a greedy tenant (if my screening doesn't catch it).
In fact I intend to transfer the rest of my cash on hand to my new LLC bank account.
Should I wait until next year(1 month away) to start the LLC and transfer the title?
I am not living in the house, and I do not intend to live in it at anytime.
Thank you for your time and advice.
You can transfer the title of the property into the LLC without having to have a closing. This is not a taxable event.
Make sure you talk it over with your CPA. Your not really transfering money, you're (as a person) making a capital investment in the LLC (an entity). Defining and doing it correctly with your CPA can save you down the road if you ever wanted the LLC to pay you back your capital investment.
As far as transfering the property to LLC, its really easy. I have done it for all my properties in SC, it cost about $100-$150 per property, depending on your county's fee's & your lawyer's fees. You will simply be doing a grand or warranty deed. Check with your lawyer, if you are running a single member LLC you may not get the legal protections (corporate veil) that you normally would with a multi-member LLC.
Originally posted by @Jesse Waters :
Check with your lawyer, if you are running a single member LLC you may not get the legal protections (corporate veil) that you normally would with a multi-member LLC.
Even with multiple members, if you're not treating it as a business, you can still have the corporate veil pierced. Meetings, minutes, officers, dividends, etc. are all things that could be examined. The best way to protect yourself is with adequate insurance such as an umbrella policy. An LLC is a false sense of security for many landlords.
Oh Wow...O.K. I didn't even think about insurance. All advice sounds good. Thanks for everything.
agreed - just make sure your K-1 reflects all this...
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