You are not a CPA. You are not a lawyer. Yadda yadda yadda. That's ok. I have my own I'm asking. But different opinions are always valuable.
I took out a HELOC on my primary residence that I plan on transferring into my llc to purchase a property here in Denver within the week. I will do this using a member resolution stating I contributed 20 percent and my wife 80 percent as that's how the ownership split works. All is well there.
But how do I go about paying and tracking the monthly payments to the HELOC. Do I need to do a monthly distribution to my personal account and then pay off the HELOC? Does the 80-20 split need to be recognized in that contribution?
Thanks in advance.
@Steven Tawresey I know this is a very old post but how did you end up resolving this? In a similar situation myself.
Would also love to hear any followup with this. Same situation. Thank you!
Hey Guys. I would say, find a good CPA and Lawyer and ask them. My CPA told me I didn't need to worry about it because the LLC didn't have any members outside my household. However, that's from a tax perspective. If we were to get sued, I'm sure a lawyer would follow the paper and destroy the 'corporate veil.'
I have since refinanced my properties into a commercial portfolio loan and the issue isn't as relevant. I still use my HELOC to purchase properties (HELOC >> Personal bank account >> Capital contribution to LLC), but I take enough credit out to cover the loan cost of the project (pay your HELOC with your HELOC). When I refinance, I funnel it all back through the same channels... Bank >> LLC account >> LLC distribution to Personal account >> Personal account to payoff HELOC.
Hope that helps.
Thanks Steven. Very helpful. Why would it pierce the veil? Shouldn’t this go to capital contribution allowed and owner withdrawal?