All Forum Posts by: Account Closed

First Western Federal Savings bank will do it on a single property.  I'm looking for others.

I am also looking for portfolio lenders that will cash out re-fi in an LLC after I buy cash and renovate. Anyone have any contacts?

ABC LLC would be formed first and then it would form and own YY LLC and ZZ LLC.

Also interested in why you would want to do this though....

Take your effective tax rate and multiply it by the amount of depreciation.  

If your effective tax rate is 30% and you have a depreciation expense of $10,000, then you have a tax savings of $3,000.

There are other factors to consider such as passive activity loss limits and depreciation recapture, but this is a good place to start.  

Let me know if you want to discuss further.

David Powers CPA

duplicate

Celine,

I am a CPA based in New York and I own four houses in Indianapolis.  Happy to connect on this subject if it is helpful for you.

David Powers CPA

davidpowerscpa.com

Hi David,

One of the main reasons that you would use an LLC rather than an S-corp for a rental is because of the cash out re-fi situation you mentioned. In an S-corp if you cash out re-fi and take more cash out of the company than what you originally put in this would be considered taxable.  In an LLC, the additional liabilities give you basis in the company and the cash out would not be considered taxable.   There are other reasons as well, happy to discuss in more detail.

David Powers CPA