I am meeting with my investor tomorrow and we are going to discuss setting up an LLC for our flipping business. With that said, since we will be paying cash for the houses and repairs, should we buy them under our LLC or in our names and then transfer to the LLC?
Please note that once we rehab the property and sell it, at the end of the year our LLC will issue a 1099 for each of us.
My partner and I have bought under an LLC, and the LLC issues a form (don't think it's a 1099, but can't remember... maybe 1065 and K-1?) at the end of the year showing our profits and splits.
I'm not sure how buying in your names and then transferring to an LLC does anything but increase your title costs. What advantage would you be trying to gain by doing it that way?
@Account Closed , thank you for your response as well. I'm not exactly sure what the form is either. I have read several post on BP that mention a 1099 but I will make sure I have a CPA in place to help us with the proper form. With regard to transferring to an LLC after the purchase, again, I have read a lot of post where flippers say they do that. I just thought it would be easier to bypass that step and buy it in the LLC's name in the first place. Based on what you and John said, I think I'm on the right track. I really appreciate your advice.