LLC on deed but not on loan, can LLC claim mortgage interest

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LLC on deed but not on loan, can LLC claim mortgage interest

Dennis Tan
Leesburg, VA · Member since 2017 · 3 posts · 1 vote

Hi Bigger Pockets family,

My question is related to the mortgage interest deduction. I purchased a condo with a personal loan (conventional mortgage), but would like to pass the ownership to my LLC (in which I have another unit - this one has no mortgage). The title company that did the settlement offered a "gift deed" as a method to transfer ownership of the property, from my wife and I to the LLC. However, the loan would still be on my name.

The LLC would use the rental income to pay for the mortgage. So, if we go this route my question is, can the LLC claim the mortgage interest even though the LLC is not in the loan?

Thanks in advance for your help .... FYI I tried to speak with my CPA, but he has been unresponsive the past two days... maybe a need to find someone else, but that discussion is for another day :)

Best,

Dennis

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  • Stanley Bronstein
    Attorney, CPA, Broker & Author · Scottsdale, AZ · Member since 2018 · 532 posts · 488 votes
    8y

    @Dennis Tan You need to be very careful here. I strongly suspect (without even seeing your loan docs on your personal loan), that transferring it to your LLC might trigger a due on sale clause and the bank could call your loan, if they ever found out. I've had countless clients over the years ask me to assist them with transferring the property from their personal name into an LLC and the first questions I ask are:

    1) Is there a lender?

    2) If so, did you get the written permission of your lender?

    The conversation usually doesn't go much further than that ...

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  • Dennis Tan
    OP
    Leesburg, VA · Member since 2017 · 3 posts · 1 vote
    8y

    @Stanley Bronstein Yes, there is a lender. I have asked for the written consent ... Thanks for the advice.

    1Reply
  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · Sarasota, FL · Member since 2017 · 5k+ posts · 3k+ votes
    8y
    Originally posted by @Dennis Tan:

    @Stanley Bronstein Yes, there is a lender. I have asked for the written consent ... Thanks for the advice.

     After, you get the consent, and transfer the property, you can deduct the interest. 

    The Loan can be in your personal name. 

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  • Dennis Tan
    OP
    Leesburg, VA · Member since 2017 · 3 posts · 1 vote
    8y

    Thanks for your feedback @Ashish Acharya. Much appreciated. 

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