All Forum Posts by: John Yowpa

thank you! that is what I figured. Will talk to our cpa

hi all

My wife and I started two LLCs recently.

LLC #1 is her non-profit. This pays rent to LLC #2, which has the mortgage for the property.

In order to pay for the property we of course has to use personal finances for the building. Her LLC #1 is the only tenant. LLC #2 is run by the two of us, without any salaries or anything.

So my question is a few fold:
1. I assume that treating the money we paid out of personal finances for the % down for the property as a loan in the end will be best. This would be a loan that LLC #2 pays off. This would be instead of writing it off as a business expense.

2. I assume we should charge interest on the loan to the LLC. I cannot find the suggested rates of interest to charge.

3. I believe that we would have to declare the interest only as income - is that still the case since LLC #2 is an LLC?

4. I believe LLC #2 can declare the interest as an expense?

I am just a little confused how all of this comes into play. We are in NY state.

thank you!