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Updated about 6 years ago on . Most recent reply

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Will Dixon
  • Accountant
  • Corte Madera, CA
88
Votes |
73
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Refinancing Property Held in an LLC

Will Dixon
  • Accountant
  • Corte Madera, CA
Posted

I am working on refinancing my first property and realized Fannie and Freddie will not close on refinances with business entities. I did not do my homework beforehand and am now wondering how the LLC being on title will impact my long term strategy. In the county where the property is, I will be paying $3.10 per $1,000 of value in transfer taxes to move the property out of and then back into the LLC. In trying to determine how many points to buy up front I am stuck thinking about the looming fixed cost of transfer taxes if and when I ever want to refinance in the future. Is there anyway around this or is this an inherent hurdle in holding property in an LLC?

I have considered the possibility of paying no points and holding the property as an individual with hopes of refinancing in the next 2-3 years. Clearly this defeats the purpose of having the LLC in the first place.

Does anyone have any creative methods to avoid the extra costs of transfer taxes over the years when wanting to refinance property held in a business entity?

TIA

Most Popular Reply

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777
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742
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Curtis Bidwell
  • Rental Property Investor
  • Olympia, WA
742
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777
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Curtis Bidwell
  • Rental Property Investor
  • Olympia, WA
Replied

Assuming you (and perhaps a spouse) are the only members of the LLC you may be able to do a quit claim to your personal name for financing. When I have done this in Washington state there is no tax due, just the filing fee. We simply write "mere change of identity" and file the document.

  • Curtis Bidwell
  • Podcast Guest on Show #95
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