Strategy for transferring personal money to LLC

[Shane Humes]

To get started in real estate investing, I am creating an LLC. In order to start, I will need to give my "LLC" self some money from my "personal" self for down payments, rehab costs, etc. I would like to eventually pay my "personal" self back. How can I do that without paying payroll taxes?

[Dan Schwartz]

You only pay taxes on income.

Withdrawals of capital and/or reimbursements of value contributed aren't income/PNL activities. They are balance sheet activities.

You could contribute a million dollars on Monday, remove half a million in Tuesday, put a million more in on Wednesday, and remove the $1.5 million balance on Thursday. You wouldn't owe any taxes, because you didn't generate any income.

Check with a CPA to confirm this concept.