Moving Rental to LLC

[Ruben Prieto]

Hola,

Please provide input on this situation.  The facts:

I am trying to use equity in my rental for start up capital.

The home is valued at $88.5K.  I owe $47K.  The interest rate is a ridiculous 7% (which I'm working to refi now).

A potential capital partner (old Army buddy) from Colorado says he will match my equity if I agree to sell it to an LLP we plan to establish (skin in the game). He mentions it could be advantageous on my 1040 (which I haven't filed yet) if I sell the home at a loss to the LLP for the remaining balance.

The mortgage is $568/mo and monthly rent is $1025.  Currently, I use part of the rent excess to pay my monthly car note and cell bill.

My potential partner is successful in the CO concessions industry but I am not too how savvy he is in REI. He seems to know business matters pretty well, which I do not (yet), and is suggesting a couple of different ways we can proceed. Personally, I have the drive/ambition/ganas/balls to become successful but my expertise is mainly a 'boots on the ground' orientation and am learning as much as possible/as fast as I can of legal business matters without getting in trouble, which is why I'm here now. I understand it takes time to learn these types of matters but I'm seeking fast track info from my readers.

~~  MY QUESTIONS ARE  ~~

- Is this legal?

- Is it true I could benefit from the loss of selling the home?

- What would you do?

- What are some other ways I could structure my partnership?

- What other questions should I be asking?

Please advise

Matador Residential, LLC