All Forum Posts by: Mike S.

Look at doing a lady bird deed instead.

The property will still be owned by your mother, but at her death it will be automatically transferred to you without probate and you will also keep the step up basis.

Also before someone else mention it, your property tax will go up (new assessed value and no more homestead) and you will need to update your insurance as it won’t be anymore a owner used property but a rental. In addition your insurance may switch you to a commercial policy due to the new owner being an entity (some insurers have landlord policy that don’t differentiate between privately owned or entity owned).

Last, as you jump into the landlord world, don’t forget a good liability and umbrella policy.

@Shaun Rice

If you want to sell your property to get the 121 exclusion, you need to sell it to a different person. A disregarded entity is not a different person. So you need a C or S Corp. I believe that you could use an LLC filing with the IRS as an S-Corp, but if you end up with an S-corp, why not directly registering the entity as such with the state to?

Regarding creating a WY holding LLC, that will cost you less than $50 per year for your registered agent in addition to a few hundred dollars to set it up. Also WY gives you anonymity that increase a bit your protection by making you less a target.

Check that video:

https://m.youtube.com/watch?v=MWFzAE7wu3k

Your operating agreements for the WY LLC are probably the most important document...

I have used both

https://www.wyregisteredagent....

https://wyomingllcattorney.com...

They have reasonable price and offer good service. The first one has also associated registered agent companies in other states too.

Be careful in Florida, for single member LLC, since Olmstead vs FTC, there is no more charging order as sole remedy. Your outside liability is greatly reduced, unless you have this LLC owned by another LLC that will be in a great charging order protection state like WY for instance.

Also, if you were living in that property for more than 2 years in the last 5 years and that is has appreciated greatly, you could 'sell' the property to an S corp for the new current value on an installment. You would take the full value of the sale on your tax return but using the 121 exclusion of up to $500,000 (for a married couple) of the gain. You S corp will then get the step up basis, start a good amortization schedule at the full rate, and when you sell down the road, you will have less tax to pay on the gain.

I have closed most of my accounts with WF due to many daily problems with them. I was very happy with Wachovia, but since WF took over, it was issue after issue. I have been happy so far with Chase for most regular banking (personal and business). I also have accounts with a few credit unions (personal) and some local banks (business). In addition, I have checking linked to some brokerage accounts. Having many banks let me choose which one to use depending on the task. For instance the max limit with Zelle with Chase is way higher than with WF. Also there is no fee for ACH. Wire transfer, national or international have also different fee schedule depending on the bank. Also having different debit/credit cards is very useful when you have one declined for a reason or another (bank network down, or blocked for your purchasing pattern that trigger their security algorithm).

If you are looking for anonymity also, you may want to throw in a Land Trust. That costs almost nothing to create, and will keep the name of your LLC (and by extension you) out of public records.

Originally posted by @Carlos C.:

Question: Why is preferred to use a warranty deed, instead of a quit claim deed? I understand that it gives you more coverage and it better if you are transfering RE from someone that you don't know... but in my case I will be transferring from myself to my LLC.

Some good answers here: https://www.youtube.com/watch?v=srTDquLh4e8

The issue is not the transfer between you and your LLC but what happened before. If you discover in a few years that your original title had a problem, your LLC has no recourse. Because you did a quit claim deed (ie not giving the LLC any assurance that the title was clear), your LLC can't do anything about it. However if you had done a warranty deed (or a special warranty deed if you still have a mortgage on it) instead, your LLC has a claim against you for the issue on the title, and you in turn can go back to your initial title insurance to fix it.

Some title insurance will allow to transfer the coverage to an LLC that you own 100%, but not all of them do or they may require an additional fee. Better play it safe and use a warranty deed instead.

Also, later on when you sell your property, it will keep the chain of title cleaner for the next title insurance.

Last but not least, a warranty deed does not cost more than a quit claim deed... It is the same recording fee, just different wording on the deed. But I agree with your initial statement that when you sell to yourself, you don't need a NEW title search or NEW title insurance.

@Shaun Rice

First, do not use a quit claim deed. Use a warranty deed instead to keep your title insurance and chain of title.

Second, it should be tax neutral for you.

Third, Most state also won’t change your property tax assessed value as the beneficiary is still the same (but you may have to prove it to your local tax collector/property appraiser)

Last, if you have mortgage, be aware of the due on sale clause that may be raised by your lender. Some lenders explicitly allow it, some don't, some won't notice. You may get around it by using a land trust and change the beneficiary to the LLC in a second step.

Don't forget once everything is done to update your insurance with the LLC as named insured. You will then become an additional insured under the policy.

@Massimo Salerno

I don’t know the rules for notary in every state, but as a notary in Florida I can tell you that it is illegal for me to notarize any document when I am not physically in Florida...

The embassy or consulate is doing notarization for these situations.