Tax question on refinance and need a CPA

[Jess Azong]

Hello! So, friend bought a property cash under their name and now refinancing (cash-out refinance) the property into an LLC that is jointly owned by both of us and we will be getting funds from this refinance for renovation work. The proceeds from cash-out amount is less than the initial purchase amount. The lender insists on paying the proceeds or the cash-out amount to the LLC and not to the friend's personal account. My questions are: Are they any implications (tax or otherwise) to my friend or the LLC? If after the funds are paid into the business account and my friend writes a check to their personal account from the LLC to get his money out, are there any accounting implications? Alternatively, what's the best way for my friend to get their funds back without any tax implications (if any) for him and business? Finally, we need a CPA, open to referral.

[Michael Plaks]

@Jess Azong

You cannot buy property owned by one person and then "refinance it into" a two-person LLC. This means that something that was owned by one person is now owned by two people. There are certainly consequences for that. How did you suddenly become an owner? What did you contribute to earn your half-ownership?

Before talking about taxes, we need to figure out how your deal is structured, and that is an actual conversation, not a few sentences on a forum.