Transferring Assets into an LLC
6 Replies
Michael Doll
from Milwaukee, Wisconsin
posted over 3 years ago
Now with the 20% tax deduction on pass-through income....how simple is it to setup an LLC and transfer a property to the new formed "company?"
Jay Patadia
Investor / CPA from Somerset, New Jersey
replied over 3 years ago
It's pretty easy to move property to LLC. Form an LLC and do QC ( Quit Claim) to move title from your personal name to LLC. I will suggest to hire lawyer for LLC formation. If you have a mortgage on property, lender don't like that you move property to LLC as they have lent you money on your personal name.
Scott L.
Investor from Flower Mound, Texas
replied over 3 years ago
My understanding is the new “pass through” tax rate is available to sole proprietorships also for Sched C and Sched E income without requiring an entity
Tim Joyce
from Minneapolis, MN
replied over 3 years ago
I agree with both Jay Patadia and Scott L’s points here.
1. It’s pretty easy to set up LLCs and transfer property via QC deed. (I have a WI law license, if you need help or have other legal questions there.) you’ll want to make sure BEFORE you do that though that the bank won’t balk and try to enforce a due on sale clause. (Again a lawyer can help you figure out if there even is one in your current financing.)
2. The pass through tax will get to you anyways, as a single member llc. Having the entity, though, should provide some asset protection that umbrella and landlord insurance policies don’t. So, I could make the argument that even though the tax implications would be a wash, you still might want the property in an entity (subject to lender approval, see #1 above).
John Mocker
Insurance Agent from Norwalk, Connecticut
replied over 3 years ago
Michael,
You may want to explore the affect on your Insurance coverage if you move the properties to an LLC. I would check with you current agent and make sure the current company will cover the properties under an LLC and if the price will change. If you have an Umbrella policy and you will using multiple LLC's you should check to make sure you can insure multiple LLCs on one policy.
Scott Smith
Attorney from Austin, TX
replied over 3 years ago
@Michael Doll hey guys...you don't have to have an LLC to get the 20% deduction...an unfiled sole proprietorship works just the same...@Jay Patadia
I do recommend using an LLC with land trusts to have protection as well as anonymity.
Michael Doll
from Milwaukee, Wisconsin
replied over 3 years ago
Hey all - Thanks for the words of wisdom. This is super helpful.