Accounting question for personal loan with title in LLC

[John Lee]

Hi guys,

I know there are tons of discussion regarding getting a loan under your name and putting the title in your LLC.

May be I am not looking hard enough but I can't seem to find how to do accounting in this situation.

How would you bookkeep expenses (closing costs, property tax, mortgage interests, etc )? Are you able to deduct these expenses that are originally in your name on LLC tax returns?

Hope this makes sense.

[Basit Siddiqi]

@John Lee

Closing costs(title fees, transfer taxes, lender fees) are not currently deductible but added to the basis of the property.

Since you have 2 members in the LLC - you will be required to file a partnership return.

Regarding your question of paying mortgage/property taxes by the LLC that are issued in your name.

I think the correct way is for you to personally pay for the property taxes and list the amount you pay on schedule E as "un-reimbursed partnership expenses(UPE)". 
Normally you are only entitled to a deduction when you are legally required to make the payment.

However, normally people would just list all the expenses on the partnership return and distribute the K-1 to the partners. If you go this route and get audited - you risk an agent questioning your deductions. If an audit ever comes up - I would just mention that the LLC is required to make the payment otherwise the property would go into foreclosure; hence is it ordinary and necessary for the partnership to make those expenses(and therefore qualified to deduct the expenses).