Can I wholesale to my other LLC?

Question

If I get a property under contract with my wholesaling LLC and I end up deciding to keep it as rental, can I wholesale it to my other LLC which holds long term rentals?

Chris Seveney · Answer

@Marquita Shines

Yes but why pay a wholesaling fee to yourself that will pay taxes on - better to keep lower price

Crystal Smith · Answer

You can quit deed the property from one LLC to another.

Marquita Shines · Answer

Got it! Sorry for asking it all weird. Lol You cleared it all up for me. Thanks and bunch and happy holidays to you and yours!

Josh Stout · Answer

@Marquita Shines Gotcha. Yes, generally you'll want to keep your active/passive entities separate. Essentially you'll lock up the contract with the seller and instead of the end buyer being a third party it will be your rental/holding LLC that takes title.

The confusion seems to be coming from the way you phrased it as "assigning it" to your holding entity. Your rental entity won't be paying the wholesale entity an assignment fee, you'll just be closing the deal loop with your holding entity as the end buyer, at the asking price. Hope this helps and happy holidays!!

Marquita Shines · Answer

My wholesaling business is active income that I file on a Schedule C. If I decide to keep a deal as a long term rental that would become passive income which I file on a schedule E. I thought as I start building my portfolio that I’ll need to keep the passive rental business separate from the wholesaling and flipping business. Not so?

Matthew Crivelli · Answer

@Marquita Shines

You can assign the assignment contract to a new LLC at the same purchase price without having the seller sign a new contract. I think this is what you are looking to do?

I've seen buyers do this when a seller refuses to sign a contract addendum that changes the buyers names / LLC name, in an attempt to get leverage over the buyer.

Josh Stout · Answer

@Marquita Shines was there a particular reason you had in mind for assigning the deal to your other entity? I'm trying to think of a justification for it, but otherwise I agree with @Chris Seveney, save the cash and keep the lower price.

Can I wholesale to my other LLC?

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