LLC with multiple partners and mortgage in personal name

[Shannon Mease]

I am a partner in an LLC with three other members. This is our first venture into real estate, and unfortunately banks won't loan to a new LLC; therefore, one of the partners is going to place the mortgage in his name. My question is, can the write offs such as interest, depreciation, and taxes pass through the LLC to the other members? Or for this to happen, does the mortgage and/or deed need to be in the LLCs name? All funds used to pay for expenses associated with the property will come from the LLC's account. The goal is for each member to claim 25% of the expenses come tax time...

[Linda Weygant]

First of all, banks will loan to a new LLC. It's just that the bank you're talking to won't. Find a bank or a credit union that does portfolio loans. One of your members will still need to personally guarantee the loan, but I highly recommend getting the loan in the LLC's name.

That said, to answer your questions directly:

My question is, can the write offs such as interest, depreciation, and taxes pass through the LLC to the other members? 

Yes, it can, but it depends on how your CPA interprets the tax code.  According to the strictest interpretation of the tax code, the person with the mortgage has a relief from liability (income) which should technically be accounted for and taxed either through a basis calculation adjustment or through an adjustment in their profit percentages or through a straight separate income reporting on the tax return.  I've seen different CPAs treat this in a variety of manners.

Or for this to happen, does the mortgage and/or deed need to be in the LLCs name?

In order to claim any income or expenses within an LLC, the asset should be in the LLCs name. If the asset is not in the LLCs name, I guess I'd ask the question as to why you would even have an LLC?