tax question on refi

2 Replies

Hi BP family.

Quick question:

Lets say, I paid $100K cash for a property purchased under a LLC. Few months later I refi'ed the property at a slightly higher amount and the bank paid the llc back $120K.

If I use the $120K in the business account and use the money to purchase another property with the same LLC, does that create any tax issues?

Alternatively, If I use the $120K in the business account and use the money to purchase another property with A DIFFERENT LLC, does that create any tax issues?

Alternatively, If I use the $120K in the business account and pay myself the $120K (ie deposit the money into my personal account), does that create any tax issues?

Thanks,

HD

Originally posted by @Harsh Dangaria :

Hi BP family.

Quick question:

Lets say, I paid $100K cash for a property purchased under a LLC. Few months later I refi'ed the property at a slightly higher amount and the bank paid the llc back $120K.

If I use the $120K in the business account and use the money to purchase another property with the same LLC, does that create any tax issues?

Alternatively, If I use the $120K in the business account and use the money to purchase another property with A DIFFERENT LLC, does that create any tax issues?

Alternatively, If I use the $120K in the business account and pay myself the $120K (ie deposit the money into my personal account), does that create any tax issues?

Thanks,

HD

The bank won't finance a property in an LLC unless you personally guarantee the loan or unless the LLC has established it's own credit report & income.

Borrowed money is not taxed.

If you move money from one LLC to another you have to follow the Operating Agreement. It matters if it is a single member LLC or a multi member LLC for tax purposes.

When you go to sell the property a variety of IRS rules kick in. How long you've owned it, the intent for which you bought it, if you ever lived in it, etc.