Tax and accounting question

7 Replies

Tax and accounting question..

A number of years ago my wife and I purchased a house and placed it in our personal name and not an LLC. Since then we have opened an LLC or two :-). This particular property is still in our personal name and for accounting purposes the houses that were already in our personal name we left in our personal name and all new stuff we placed in an LLC. We have an asset based lender that is doing a refi on a couple of our properties and this is one of the ones there open to doing. The challenges they are saying we need to put it in an LLC. For accounting purposes we are resisting a bit. When we first started working with this particular lender they said that it would not be a problem if this property is in our personal name since it already was and now they're changing their tune. Has anyone come across this personally?

Originally posted by @Joe S. :

Tax and accounting question..

A number of years ago my wife and I purchased a house and placed it in our personal name and not an LLC. Since then we have opened an LLC or two :-). This particular property is still in our personal name and for accounting purposes the houses that were already in our personal name we left in our personal name and all new stuff we placed in an LLC. We have an asset based lender that is doing a refi on a couple of our properties and this is one of the ones there open to doing. The challenges they are saying we need to put it in an LLC. For accounting purposes we are resisting a bit. When we first started working with this particular lender they said that it would not be a problem if this property is in our personal name since it already was and now they're changing their tune. Has anyone come across this personally?

Is there a reason you are hesitant on transferring this one property to LC when you already have other properties there?

Originally posted by @Ashish Acharya :
Originally posted by @Joe S.:

Tax and accounting question..

A number of years ago my wife and I purchased a house and placed it in our personal name and not an LLC. Since then we have opened an LLC or two :-). This particular property is still in our personal name and for accounting purposes the houses that were already in our personal name we left in our personal name and all new stuff we placed in an LLC. We have an asset based lender that is doing a refi on a couple of our properties and this is one of the ones there open to doing. The challenges they are saying we need to put it in an LLC. For accounting purposes we are resisting a bit. When we first started working with this particular lender they said that it would not be a problem if this property is in our personal name since it already was and now they're changing their tune. Has anyone come across this personally?

Is there a reason you are hesitant on transferring this one property to LC when you already have other properties there?

We have done personal properties as well as LLC properties separate as far as accounting.

Originally posted by @Joe S. :
Originally posted by @Ashish Acharya:
Originally posted by @Joe S.:

Tax and accounting question..

A number of years ago my wife and I purchased a house and placed it in our personal name and not an LLC. Since then we have opened an LLC or two :-). This particular property is still in our personal name and for accounting purposes the houses that were already in our personal name we left in our personal name and all new stuff we placed in an LLC. We have an asset based lender that is doing a refi on a couple of our properties and this is one of the ones there open to doing. The challenges they are saying we need to put it in an LLC. For accounting purposes we are resisting a bit. When we first started working with this particular lender they said that it would not be a problem if this property is in our personal name since it already was and now they're changing their tune. Has anyone come across this personally?

Is there a reason you are hesitant on transferring this one property to LC when you already have other properties there?

We have done personal properties as well as LLC properties separate as far as accounting.

Just put it under SMLLC. The tax reporting and even the accounting doesn’t change. 

Originally posted by @Ashish Acharya :
Originally posted by @Joe S.:
Originally posted by @Ashish Acharya:
Originally posted by @Joe S.:

Tax and accounting question..

A number of years ago my wife and I purchased a house and placed it in our personal name and not an LLC. Since then we have opened an LLC or two :-). This particular property is still in our personal name and for accounting purposes the houses that were already in our personal name we left in our personal name and all new stuff we placed in an LLC. We have an asset based lender that is doing a refi on a couple of our properties and this is one of the ones there open to doing. The challenges they are saying we need to put it in an LLC. For accounting purposes we are resisting a bit. When we first started working with this particular lender they said that it would not be a problem if this property is in our personal name since it already was and now they're changing their tune. Has anyone come across this personally?

Is there a reason you are hesitant on transferring this one property to LC when you already have other properties there?

We have done personal properties as well as LLC properties separate as far as accounting.

Just put it under SMLLC. The tax reporting and even the accounting doesn’t change. 

 How does SMLLC Work with a husband and wife? Also it appeared from what I have read that I would still have to file something each year for the SMLLC which would create more paper work and accounting. This would also increase the cost for our tax returns each year.

Please advise.

Keep in mind an LLC is not a tax entity, it's a business entity. It shouldn't effect your tax structure, it protects your personal assets, literally "Limiting your Liability." I do see how moving the properties around could complicate your accounting.

Originally posted by @Joe S. :
Originally posted by @Ashish Acharya:
Originally posted by @Joe S.:
Originally posted by @Ashish Acharya:
Originally posted by @Joe S.:

Tax and accounting question..

A number of years ago my wife and I purchased a house and placed it in our personal name and not an LLC. Since then we have opened an LLC or two :-). This particular property is still in our personal name and for accounting purposes the houses that were already in our personal name we left in our personal name and all new stuff we placed in an LLC. We have an asset based lender that is doing a refi on a couple of our properties and this is one of the ones there open to doing. The challenges they are saying we need to put it in an LLC. For accounting purposes we are resisting a bit. When we first started working with this particular lender they said that it would not be a problem if this property is in our personal name since it already was and now they're changing their tune. Has anyone come across this personally?

Is there a reason you are hesitant on transferring this one property to LC when you already have other properties there?

We have done personal properties as well as LLC properties separate as far as accounting.

Just put it under SMLLC. The tax reporting and even the accounting doesn’t change. 

 How does SMLLC Work with a husband and wife? Also it appeared from what I have read that I would still have to file something each year for the SMLLC which would create more paper work and accounting. This would also increase the cost for our tax returns each year.

Please advise.

If husband and wife both need to own the property, then transfer it to your existing LLC. There wouldn't be any extra filing if you do so.
PM me if you want to discuss further so I can clarify. 

@Joe S.

With a single member LLC, its disregarded at the Federal level meaning the Feds just don't consider your LLC as a separate entity for tax purposes. So your personal tax return with regards to rental properties is really the same thing.

Of course, you did mention in your OP about your wife... Since you already have multi-member LLC's, I don't see how another would hurt. You'd just have another partnership return to be filed and a K-1 sending the profit/losses to your 1040 anyway...

I don't have experience with a portfolio loans, but perhaps you could elaborate on your issue with your personal accounting. Are you talking from an "accounting" or "legal / corporate veil" point of view? Are you basically saying that by moving personal properties into a LLC, you don't want the extra bookkeeping overhead of having the extra set of books, bank account, etc. to deal with the LLC? You already have other LLC's so I figure you know the ropes, both in the sense you understand what's required and realize you might not want more of it :)

Sorry for the long post that doesn't answer your OP.  Wanted to chime and see if there was a "third option" or other point of view for you.

Good luck.