Accounting question for personal loan with title in LLC

8 Replies

Hi guys,

I know there are tons of discussion regarding getting a loan under your name and putting the title in your LLC.

May be I am not looking hard enough but I can't seem to find how to do accounting in this situation.

How would you bookkeep expenses (closing costs, property tax, mortgage interests, etc )? Are you able to deduct these expenses that are originally in your name on LLC tax returns?

Hope this makes sense.

@John Lee you should track your business expenses and income for everything related to the property. You can then file a schedule c or e at the end of the year for all expenses related to the business. Check with your accountant to ensure everything is correct and have them help with your tax prep. It's my understanding that the name on the loan doesn't change the tax impact. Good luck

@James E. There are two members in the LLC and two names on the loan as well.

@Danny Randazzo Yes, so I will be performing all business related transactions such as making loan payments, property taxes, receiving rent, etc with LLC account. I guess since the title will be hold by the LLC, the property tax bill will come out to the LLC. However, the loan statements will be in my name but paid by the LLC. If the name on the loan doesn't matter, LLC should be able to claim the deductions related to the loan. Does this sound right?

@John Lee

Closing costs(title fees, transfer taxes, lender fees) are not currently deductible but added to the basis of the property.

Since you have 2 members in the LLC - you will be required to file a partnership return.

Regarding your question of paying mortgage/property taxes by the LLC that are issued in your name.

I think the correct way is for you to personally pay for the property taxes and list the amount you pay on schedule E as "un-reimbursed partnership expenses(UPE)". 
Normally you are only entitled to a deduction when you are legally required to make the payment.

However, normally people would just list all the expenses on the partnership return and distribute the K-1 to the partners. If you go this route and get audited - you risk an agent questioning your deductions. If an audit ever comes up - I would just mention that the LLC is required to make the payment otherwise the property would go into foreclosure; hence is it ordinary and necessary for the partnership to make those expenses(and therefore qualified to deduct the expenses).

Basit Siddiqi, CPA
917-280-8544

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