HELOCs on properties in LLC
Hello, I have been looking into getting a HELOC on my rental property. What I seem to be running into is finding a place that would allow a HELOC on an investment property that is in an LLC. I haven't had much luck finding answers online but am wondering if anyone has pulled a heloc or opened a credit line on their equity on a property in an LLC. Any help would be appreciated! Thank you.
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#2 Real Estate Success Stories Contributor
- CPA, CFP®, PFS
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HELOC are usually for primary residences. You are asking about just the LOC on you investment asset.
From a tax perspective, pulling a LOC on a rental is fine; the interest is deductible as long as the borrowed funds are used for the rental or other business/investment purposes. The challenge is more on the lending side. Most banks won't issue LOCs directly to LLCs, since they prefer lending to individuals, and that's probably why you're hitting a wall.
What some investors do is keep the deed in their personal name to get the LOC, then run the rental operations through the LLC. Others look at commercial lenders or small local banks that are more flexible with LLC-owned property. Just keep in mind: however you structure it, the tax treatment of the interest follows where you use the funds.
This post does not create a CPA-client relationship. The information contained in this post is not to be relied upon. Readers are advised to seek professional advice.
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