Putting multi-fam property in business name while holding a loan

Tax, SDIRAs & Cost Segregation
6yFollow

Putting multi-fam property in business name while holding a loan

Jason Etheridge
Rental Property Investor · Fort Lauderdale, FL · Member since 2019 · 23 posts · 4 votes

I am under contract on a 4 unit. What is the process of flipping the property into a business name for write offs and tax purposes?

I’m told if you quit claim the property to a business name for write offs and protecting yourself, that the mortgage company could possibly want to collect the sum of the debt owed

Any way around this or advice?

Thanks,

Jason

0Reply
13 views

Most Popular Reply

Wayne Brooks
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
6y

Transferring title to an entity has Zero effect on any write offs or taxes....it is entirely for asset protection, for those who think it helps.

2Reply
See this reply in the discussion

5 Replies

Jump to latestLatest
  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    6y

    Transferring title to an entity has Zero effect on any write offs or taxes....it is entirely for asset protection, for those who think it helps.

    2Reply
  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
    6y
    Originally posted by @Jason Etheridge:

    I am under contract on a 4 unit. What is the process of flipping the property into a business name for write offs and tax purposes?

    I’m told if you quit claim the property to a business name for write offs and protecting yourself, that the mortgage company could possibly want to collect the sum of the debt owed

    Any way around this or advice?

    Thanks,

    Jason

    You do not need to put it under "Business". If you sell something with an intent to sell, you can also take a deduction related to activity.

    You can report the activity under Sch C of 1040 and take all the appropriate deductions. 

    [email protected]941-914-7779
    INVESTOR FRIENDLY CPA®5241 Reviews
    WebsiteView Page
    TaxMD® | Tax Planning Software
    WebsiteView Page
    1Reply
  • Michael PlaksPro Member
    Tax Accountant / Enrolled Agent · Houston, TX · Member since 2014 · 5k+ posts · 6k+ votes
    6y

    @Jason Etheridge

    @Wayne Brooks nailed it: no need to complicate anything for tax purposes. With or without a formally organized business, you have the exact same deductions and same taxes.

    Whether or not you have an issue with legal protection and whether or not you can address it by creating a formal business entity is a question for attorneys. Warning, however: there is no consensus even among the attorneys when it comes to asset protection. Ditto for the lender potentially calling the note, aka due-on-sale problem. Opinions vary, with most investors opting to ignore this issue.

    That said, your post betrays your being new to business operation and taxes. You're likely to make mistakes, possibly costly ones, by not doing things right. I'd recommend getting some guidance either from professionals like lawyers and accountants or at least from experienced investors.

    1Reply
  • Jason Etheridge
    OP
    Rental Property Investor · Fort Lauderdale, FL · Member since 2019 · 23 posts · 4 votes
    6y

    @Michael Plaks

    I will get in touch with a professional, I appreciate the advice. I’ve read a bunch of books and am just now getting my feet wet. Definitely want to minimize the amount of mistakes I make in the beginning.

    0Reply
  • Basit SiddiqiBusiness Member
    Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
    6y

    @Jason Etheridge

    As others have mentioned - you don't need an entity to be able to take advantage of tax deductions.
    You are entitled to the same deductions whether the property is in your personal name or the name of an entity.

    [email protected]917-280-8544
    Basit Siddiqi CPA4.979 Reviews
    View Page
    1Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free