Transferring Assets into an LLC

6 Replies

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?"

@Michael Doll ,

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.

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 

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).

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.

@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.

Hey all - Thanks for the words of wisdom. This is super helpful.

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