LLC Tax and Debt Questions

1 Reply

Hello BP,

I am in the process of closing on a commercial refi loan on a property. When i had bought the property cash, i had formed an LLC but ended up not using it as i didn't want to roll the property into an LLC and then have issues with getting a refi. As this is a commercial lender they are telling me i can put this into an LLC. At this point I'm mainly looking at it for tax advantages and if i can shield my self from acquiring the personal debt. If anyone on here, preferable an accountant can shed some light on this that would be great. I would also like to know if i set up the LLC correctly in the first place and if changes can be made if not?

- I read that if i have a personal guarantee to the debt, than it would show on my debt to income ratio? assuming this is true, is this typically a requirement of commercial lenders to have that guarantee or is the house as collateral enough? If there is a personal guarantee to the debt can you still build credit under the LLC?

- If this is a single member LLC taxed through my personal return would this save taxes by avoiding double taxation? how exactly do the tax benefits work if at all with a single member LLC

- in this situation, would both the property and the loan have to be under the LLC?

I know these may be novice questions but any help would be appreciated, thanks BP!

Originally posted by @Stephen McGrath :

Hello BP,

I am in the process of closing on a commercial refi loan on a property. When i had bought the property cash, i had formed an LLC but ended up not using it as i didn't want to roll the property into an LLC and then have issues with getting a refi. As this is a commercial lender they are telling me i can put this into an LLC. At this point I'm mainly looking at it for tax advantages and if i can shield my self from acquiring the personal debt. If anyone on here, preferable an accountant can shed some light on this that would be great. I would also like to know if i set up the LLC correctly in the first place and if changes can be made if not?

-

- I read that if i have a personal guarantee to the debt, than it would show on my debt to income ratio? assuming this is true, is this typically a requirement of commercial lenders to have that guarantee or is the house as collateral enough? If there is a personal guarantee to the debt can you still build credit under the LLC?

- If this is a single member LLC taxed through my personal return would this save taxes by avoiding double taxation? how exactly do the tax benefits work if at all with a single member LLC

- in this situation, would both the property and the loan have to be under the LLC?

I know these may be novice questions but any help would be appreciated, thanks BP!

I am in the process of closing on a commercial refi loan on a property. When i had bought the property cash, i had formed an LLC but ended up not using it as i didn't want to roll the property into an LLC and then have issues with getting a refi. As this is a commercial lender they are telling me i can put this into an LLC. At this point I'm mainly looking at it for tax advantages and if i can shield my self from acquiring the personal debt. If anyone on here, preferable an accountant can shed some light on this that would be great. I would also like to know if i set up the LLC correctly in the first place and if changes can be made if not?

- There would’t  be any tax saving just because you have this in your LLC. 

- I read that if i have a personal guarantee to the debt, than it would show on my debt to income ratio? assuming this is true, is this typically a requirement of commercial lenders to have that guarantee or is the house as collateral enough? If there is a personal guarantee to the debt can you still build credit under the LLC?

- This is a lender specific requirement. I am sure they have other non-recourse products.

- If this is a single member LLC taxed through my personal return would this save taxes by avoiding double taxation? how exactly do the tax benefits work if at all with a single member LLC

- There wouldnt be any tax saving or double taxation. Your SMLLC is disregarded for tax. You report everything on your personal return.

- in this situation, would both the property and the loan have to be under the LLC?

- Yes if that is what your lender asking to do.