Posted on: 30th Dec, 2007 09:33 pm
my business partner and i are about to close on our second investment property. we already own house with a mortgage on it in both of our individual names and the second one will be set up the same way. these are rental homes in florida. i have two questions.
1. even though we have mortgages on them can i quit deed them over to an llc?
2. is it better to form an individual llc for each property for liability purposes.
3. will this cause a problem with insurance companies if there's ever a claim made?
thanks
1. even though we have mortgages on them can i quit deed them over to an llc?
2. is it better to form an individual llc for each property for liability purposes.
3. will this cause a problem with insurance companies if there's ever a claim made?
thanks
Hi Aglot,
Welcome to the forums.
You can quitclaim the rental properties to an LLC but it's better to take permission from the lender. He might object to such a transfer because in case you fail to repay the loan, the lender cannot demand the payment from the LLC. So, somewhere his interest will be lost!
However, even if you are able to transfer the property to LLC, it is better to set up the LLC as a sole member llc. That is, in order to avoid tax issues, you need to transfer property to an LLC of which you are the only member. Also, the LLC should be treated as if it's under your taxpayer identification in order to avoid tax consequences.
It's better to consult a tax advisor before you affect the transfer.
Take Care and have a great new year ahead :)
Welcome to the forums.
You can quitclaim the rental properties to an LLC but it's better to take permission from the lender. He might object to such a transfer because in case you fail to repay the loan, the lender cannot demand the payment from the LLC. So, somewhere his interest will be lost!
However, even if you are able to transfer the property to LLC, it is better to set up the LLC as a sole member llc. That is, in order to avoid tax issues, you need to transfer property to an LLC of which you are the only member. Also, the LLC should be treated as if it's under your taxpayer identification in order to avoid tax consequences.
It's better to consult a tax advisor before you affect the transfer.
Take Care and have a great new year ahead :)
Hi Aglot,
Sara has given you sound info.
You have to take the lender's consent as the lenders don't always agree to let you quitclaim the property.
And before taking any decision consult with a tax advisor.
Best of luck,
Larry
Sara has given you sound info.
You have to take the lender's consent as the lenders don't always agree to let you quitclaim the property.
And before taking any decision consult with a tax advisor.
Best of luck,
Larry
Most lenders will not allow you to transfer the property into an LLC but it doesn't hurt to call your lender and find out for sure.
1. Even though we have mortgages on them can I quit deed them over to an LLC?
Yes, with the permission of the lender. Check with the lender first. Usually, it is allowed with a personal guarantee.
2. Is it better to form an individual LLC for each property for liability purposes.
Yes, with you and your partner as members in the LLCs.
3. Will this cause a problem with insurance companies if there's ever a claim made?
No. Make sure the LLC is the beneficiary of the insurance policy.
Yes, with the permission of the lender. Check with the lender first. Usually, it is allowed with a personal guarantee.
2. Is it better to form an individual LLC for each property for liability purposes.
Yes, with you and your partner as members in the LLCs.
3. Will this cause a problem with insurance companies if there's ever a claim made?
No. Make sure the LLC is the beneficiary of the insurance policy.
