Hi group, does property tax stay the same when purchasing a property in Cleveland under an LLC from an individual owner or does it fluctuate and how?
Thanks in advance.
I am not a CPA, however taxes are the same regardless if you purchase in your name or an LLC. LLC taxes pass through to your personal tax return and are taxed according to your personal tax bracket.
Hi group, does property tax stay the same when purchasing a property in Cleveland under an LLC from an individual owner or does it fluctuate and how?
Thanks in advance.
I am not a CPA, however taxes are the same regardless if you purchase in your name or an LLC. LLC taxes pass through to your personal tax return and are taxed according to your personal tax bracket.
I agree with @Nicholas Misch with one caveat. If the seller was older they may have a Homestead Reduction. This will go away when they sell it and the LLC takes over.
I agree with @Nicholas Misch with one caveat. If the seller was older they may have a Homestead Reduction. This will go away when they sell it and the LLC takes over.
That’s a great point David I forgot to mention. The BRRRR we are doing now had the homestead exemption and we know it won’t carry over.
My father-in-law just purchased a home that was involved with Homestead Reduction. The previous owners had it for 10 years but did not qualify for the reduction, but the owners before them did. The county didn’t remove the Homestead Reduction until my father in law purchased it and is now being told he is responsible for the last 10 years of unpaid (improperly reduced) taxes to the tune of some 12k. He is actively trying to fight that now.
My father-in-law just purchased a home that was involved with Homestead Reduction. The previous owners had it for 10 years but did not qualify for the reduction, but the owners before them did. The county didn’t remove the Homestead Reduction until my father in law purchased it and is now being told he is responsible for the last 10 years of unpaid (improperly reduced) taxes to the tune of some 12k. He is actively trying to fight that now.
Wow that’s crazy! I hope they work with him and it works out.
My father-in-law just purchased a home that was involved with Homestead Reduction. The previous owners had it for 10 years but did not qualify for the reduction, but the owners before them did. The county didn’t remove the Homestead Reduction until my father in law purchased it and is now being told he is responsible for the last 10 years of unpaid (improperly reduced) taxes to the tune of some 12k. He is actively trying to fight that now.
Sounds like an issue to take to the title company. If taxes were to be prorated to the time of purchase, anything incurred prior to title transfer should be the old owner's responsibility. If title didn't catch this or account for it, it sounds like their problem to correct between themselves and the old owner.
Hi group, does property tax stay the same when purchasing a property in Cleveland under an LLC from an individual owner or does it fluctuate and how?
Thanks in advance.
Some more creative title agents have a trick they can use, sometimes called a "swap and drop". Basically they xfer the property into a newly created LLC (so you can be sure it has no pre-existing liabilities, debts, etc.) which is owned by the seller. The xfer into the LLC is an exempt transaction that doesn't pay conveyance tax or trigger a revaluation of tax assessed value. Next, the fresh LLC that owns the property is transferred from the old owner to the new owner. This doesn't protect you from new tax valuations forever, but if we're talking larger value properties with an assessed value well below the new sales price, it can sometimes be worth the extra transaction costs up front to avoid increased property taxes for a little while.