"Sale" of the property from personal to LLC

[Eric Stets]

Hi All

Have a friend of a friend helping with taxes/accounting. We have a property in our personal names at closing, then afterwards we moved the deed to an LLC created some months later.

However the accountant is suggesting we create a mortgage note for the sale of the property from personal to LLC. The collateral mortgage back to us personally for wherever our personal capital gain appetite resides. It should be a note payable from the LLC to us and formalized with a filing at the county, etc. Does this make sense to others out there? On top of that even setting an interest rate in our favor.

A bit confused on this one..

[Ashish Acharya]

Originally posted by @Eric Stets:

Originally posted by @Ashish Acharya:

Originally posted by @Eric Stets:

Hi All

Have a friend of a friend helping with taxes/accounting. We have a property in our personal names at closing, then afterwards we moved the deed to an LLC created some months later.

However the accountant is suggesting we create a mortgage note for the sale of the property from personal to LLC. The collateral mortgage back to us personally for wherever our personal capital gain appetite resides. It should be a note payable from the LLC to us and formalized with a filing at the county, etc. Does this make sense to others out there? On top of that even setting an interest rate in our favor.

A bit confused on this one..

This is not correct. You don't sale the property to you LLC, if you had actually sold the peopery, you have to report the gain/loss.

You just contribute property and book your asset and capital accounts at your LLC level. 

Thanks (to both above).   I thought this was odd, and a lot of running around and possibly getting things notarized unnecessarily.   Have you even heard of a suggestion like this or a situation where this does make sense?   I was scratching my head on it for sure.   

 Usually doesn’t make sense unless you have very unique tax matter going on.