Transfer house to LLC?

[Account Closed]

Good Morning BP! Details: My wife and I are talking about buying a new house and renting ours out. We have run the numbers and everything looks like it will work out. My concern is that we will have this rental under our own names and from a liability stand point I am concerned about keeping it there long term. (Or even short term) We are changing insurance to be landlord insurance but it's still a concern. This would be our first rental of hopefully many properties. Plus no LLC or similar exists at the moment. Question: Once I have an LLC/Inc set up do I have to sell my company the property and pay for all the associated costs or is there a better way? Thanks in advance for any assistance! Jesse

[Edward B.]

@Account Closed

There is a lot, and I mean A LOT, to consider when it comes to establishing a business entity for real estate investing. As such, I am only going to answer your specific question but understand that there is a lot more research to be done and questions to be answered before you know if it is the right move or not.

From what I have read (and I believe there was a blog post recently about it here on BP) you do not want to own investment real estate in a corporation. I do not own a corporation and cannot really speak to the reasons or complications associated with that. Most people who recommend a business entity for real estate will recommend an LLC. If the LLC is set up properly, you can simply Quit Claim Deed the property into the LLC. You may have to pay some transfer taxes depending on your local laws but that should be minimal. You do not have to "sell" the property to your LLC, though, and should not incur a taxable event.