I am the only debtor to my LLC. How can I deduct debt repayment if I dissolve the LLC but continue the business?
We are seeking a first mortgage from a local bank for our 4-plex. We had renovated it since purchase. The loan has to have the property titled in our names, not the name of the LLC. How do we account for the debt if we were to dissolve or cancel the LLC at the same time as changing the names on the title? When I am able to repay the debt later I want to be able to deduct it.
Our main concern is the debt (all unsecured) which we took out in our personal names and then used for business purposes. How do I write down who owns the debt and what happens to the debt if I were to dissolve or cancel the LLC (recommended to avoid the transfer tax while getting the loan.)
If we cancel the LLC, we are still paying back the debt because it is in our names. How does the debt transfer from the LLC business to our small business?
We have not yet started repaying ourselves because 2012 had no income and 2013's apartment income is still overshadowed by the renovation expenses. 2014 should show a profit.
How we deal with the debt is an unknown to us. Do we want to be able to deduct the repayment of the debt to ourselves? Can we do that if the LLC closes?
An attorney explained that if we put the property in both our names, being also the original and same owners of the LLC, there is an exemption to the transfer tax. The loan requires that we change ownership out of the LLC. The attorney for the bank is suggesting that to dissolve the LLC to avoid the transfer tax. If you know, can we avoid the transfer tax but keep the LLC? We are willing to give up the LLC on the title and as a business structure if we knew how to account for the debt in our names which is associated with the business.
Thank you!