Transferring property from Owner to LLC after purchase
I am a newbie here, thanks everyone for amazing information.
We are buying our first STR, paying cash, our LLC is in the process of being formed but will take another 6 weeks our Attorney told us.
Is there any issues that we should be aware of in this transfer in terms of liability, hidden costs, title concerns. Thank you in advance for any help you can offer.
@Lisa Albright congratulations on your first investment property! There are probably tons of posts and articles on this subject if you search for "due on sale clause". Essentially transferring the title from your personal names to the LLC can be considered a sale by the mortgage company and they can call the whole balance of the loan due. It is rare that they would find out or care, but there is a simple solution. You can ask them for permission! That's the very basics. Do a little research on this topic and best of luck to you!
Quote from @Dave E.:
@Lisa Albright congratulations on your first investment property! There are probably tons of posts and articles on this subject if you search for "due on sale clause". Essentially transferring the title from your personal names to the LLC can be considered a sale by the mortgage company and they can call the whole balance of the loan due. It is rare that they would find out or care, but there is a simple solution. You can ask them for permission! That's the very basics. Do a little research on this topic and best of luck to you!
Thanks Dave for the well congratulations and for the information. We will not have a mortgage on it so I'm hoping is should be an easy transfer but seems like there are always little nuances that pop up!!
I really appreciate your feedback and will continue my research. Have a great day!!
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@Lisa Albright
This is one of the most talked about (and over used) topics/strategies here on BP
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#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
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Ask your CPA two questions,
1. If the transfer in deed will cause a taxable event.
2. Can you write off closing costs closed in your personal name to your LLC?
You will have to pay to switch the deed over.
Quote from @Eliott Elias:
Ask your CPA two questions,
1. If the transfer in deed will cause a taxable event.
2. Can you write off closing costs closed in your personal name to your LLC?
You will have to pay to switch the deed over.
Great questions, thank you Elliot. Really appreciate your feedback!
@Eliott Elias @Lisa Albright
Transferring ownership to an LLC, with no change in beneficial ownership is not subject to NY transfer tax. In terms of closing costs in your personal name vs LLC, there is no tax benefit of an LLC. You'll be able to deduct the same expenses for the STR regardless of an LLC or no LLC. The benefits of an LLC include asset protection, limited liability, increased opportunities for tax planning and so on.
Thanks so very much Randall! I really appreciate it. Looks like you are in my neck of the woods, Glens Falls!
Thank you so much for your feedback!