LLC, Tax Benefits, Rentals

[Account Closed]

Hello BP!

I have a question about using an LLC. Seeing as it is more difficult to get financing for rentals using an LLC when starting out, would it be an option to purchase a property in my personal name, then sell that property to the LLC I own using the ‘subject too' method, keeping the mortgage in my personal name? Would this be a legal way to limit personal liability when it comes to rentals while still being able to take advantage of tax benefits on my personal income?

[Darius Ogloza]

Your mortgage will almost certainly contain a "due on sale' clause that will be triggered upon your transfer to the LLC. In short, the bank will gain the right (but not the duty) to call your mortgage in if you make the transfer. Some feel comfortable taking this risk. Others do not. You may want to ask your bank first; all they can say is "no."