Mason, OH · Member since 2016 · 14 posts · 6 votes
Hi folks,
I and my business partner own a couple of properties under a 2-member LLC. Would it be possible (legal) to sell the houses to my wife or my business partner's wife and get conventional loans while doing that?
Los Angeles · Member since 2018 · 464 posts · 471 votes
5y
1. Contact an attorney familiar with LLC and Tax law in your jurisdiction.
2. I honestly doubt this would work, even if it proves to be legal. Lenders aren't stupid. They'll see your wife's name on the deed and immediately ask, "ok, so what's different between you, her, and your LLC?" Then no matter how you answer, in this day and age of Covid "Abundance of Caution" they'll just deny the loan. They're not hurting for borrowers right now.
3. Everything I've heard about LLC's says to get the loans in your name, then if you want to, transfer them to the LLC. But I've also heard opinions that you most likely won't really need an LLC. I don't remember the details, but we have a BPer who handles "Land Trusts" and recommends that strategy over LLC.
4. Did I say to contact an attorney? Bears repeating.
1. Contact an attorney familiar with LLC and Tax law in your jurisdiction.
2. I honestly doubt this would work, even if it proves to be legal. Lenders aren't stupid. They'll see your wife's name on the deed and immediately ask, "ok, so what's different between you, her, and your LLC?" Then no matter how you answer, in this day and age of Covid "Abundance of Caution" they'll just deny the loan. They're not hurting for borrowers right now.
3. Everything I've heard about LLC's says to get the loans in your name, then if you want to, transfer them to the LLC. But I've also heard opinions that you most likely won't really need an LLC. I don't remember the details, but we have a BPer who handles "Land Trusts" and recommends that strategy over LLC.
4. Did I say to contact an attorney? Bears repeating.
Mason, OH · Member since 2016 · 14 posts · 6 votes
5y
Hi Chris. Thank you for your message.
The houses are paid off. We would like to get some liquidity out but have not found a lender who is willing to do cash out refi for a multi member llc, and we don't want to give up on the properties yet.
Rental Property Investor · Knoxville, TN · Member since 2011 · 701 posts · 531 votes
5y
I would think it would likely trigger capital gains but talk to a CPA, I am certainly not tax expert. If you own it free and clear and are not able to get a LOC against the property then there must be an underlining issue besides the LLC structure. I don't see were a two member LLC has any bearing, think about all the partnerships out there that buy assets. Why are banks saying they will not lend to a two member LLC?