I currently own my primary residence which I am house hacking and just purchased my first investment rental as well. Both properties are located in Baltimore County, Maryland. My initial plan was to transfer the title of my rental property to my LLC however once I started that process I received some interesting information from my title company. Here is what they said.
"I want to make sure you understand the rules for this type of transaction. In order to be exempt from transfer taxes, you need to transfer all of your Baltimore County investment properties into the LLC at the same time. You’re allowed to keep your personal residence in your own name. But, every other Baltimore County property that’s currently in your name needs to be given to the LLC. Also, you won’t be able to do this in the future for additional Baltimore County properties. You’re free to purchase additional Baltimore County properties as the LLC. But, you can’t purchase additional Baltimore County properties in your own name, and then transfer them to the LLC without paying transfer taxes."
My intention is to make my primary residence a full-time rental in the next 1 to 2 years. As I see it I have 3 options.
1) Transfer the rental property to the LLC like I originally planned and just pay the transfer tax on my current primary residence and any additional investment properties I purchase in the future.
2) Transfer both my rental and primary residence into the LLC now.
3) Leave both properties in my name and wait to transfer the title for these properties into the LLC at a later date once I have more properties I would like to place in the LLC.
If you were faced with this situation which option would you choose for yourself and why?