All Forum Posts by: Delfin F.

I own a property that showed a small loss for this tax year.The reason for this loss was due to depreciation.My question is how or what do i do with the money that is in the bank which represents the depreciation amount.Can I distribute it to the members (3 of us) .Any rules I need to follow .Is it considered a distribution or a return of capital or neither.

I was told that the interest would be an income and that I would pay taxes on that but that it would be offset by the interest write off from the LLC.Although it would be short lived as I intend to pay ourselves back the loan and get a bank mortgage to do that .Than i would deduct that interest going forward .---Another question i have is if you're allowed to take the money from a mortgage acquired from the equity in your LLC property and use it personally or whether you have to put it in the llc account (assuming house is paid for,loan is on value of property i or rather three members contributed to llc)Would this be considered a return of capital which i can use personally or are there any problems I may create by doing this such as tax consequences or piercing the corporate veil?

Thanks Stephen ,the reason I needed to loan to the LLc is because the properties that i'm looking to buy are cash only and banks wont finance them so I can only buy them with cash.I can come up with the cash to loan the llc for the purchase but i have to get the $ back out so this is the reason that i need to pull out a mortgage after i fix the property.The LLC has three members but all three would be equal in the loan and mortgage .Thanks!!!

Hi,I have a question concerning how I can fund my investment .I plan on purchasing a rental property soon but I'm concerned about tax implications.My plan is to set up an LLC in order to loan that LLC the money to purchase the rental property.After that I plan on rehabing the property and than acquiring an equity mortgage on the property to repay the first loan which i made to my LLC.I have a few banks that are willing to loan to my LLC with my personal guarantee.Are there any tax issues that I should be aware of ?

Great point Steve,completely agree ! Thanks !

Thanks Russell.I talked to a bank in my area and they are willing to put the loan in the LLc's name and i would personally back it.I would still feel better doing it this way since the mortgage is in the LLc's name and i would not risk the due on sale clause taking effect like you said.Furthermore this way the mortgage lien attaches to the property owned by the llc and not to me.I still personally guarantee it but if the mortgage were in my name and i sell the property to the LLc than as I see it i  no longer own the property ,the llc does.If the llc becomes liable than it would own the property and be at risk and i would still be personally liable for that Loan.Perhaps i'm wrong  but i'm not sure.Good question for my lawyer i suppose.

Hi to everyone,I'm a small investor and I'm new to BiggerPockets.Great site by the way,very helpful.I have a question that I haven't been able to answer.If I get a mortgage in my name and than I form an LLc and title the property to the LLC what are the consequences on that mortgage.In effect what happens if the LLc gets in a lawsuit.Will the property be liable since it is owned by the LLc and perhaps be taken by a creditor or will the mortgage still act as an equity stripping vehicle.Since the mortgage is in my name and not the LLc will the LLc have to pay the creditor and will i still be responsible for the loan,or will the Loan still attach to the property and act as a first lien even though the LLc owns the property.Will i lose the equity stripping protection of the mortgage if i put the property in an LLc.Thanks .