Warranty Deed to LLC & Mortgage Interest

[Angie Menegay]

Hi everyone,
I don't know if this question has been addressed before (my apologies if it has since I couldn't find the right thread). I'm thinking of deeding our rental properties into an LLC (our lawyer suggested General Warranty Deed vs. Quitclaim Deed). However, I am not sure how mortgage interest would be claimed at the end of the year when taxes are filed? I presume the interest statements sent from the bank are still for our personal SSN (since we're still the borrowers on the mortgages).
Maybe this is something a lot simpler than I am thinking ... How's everyone doing it?
Thanks for any advice you might have!
Angie

[Account Closed]

Originally posted by Jon Holdman:

If you have a single member LLC with the default tax treatment, it has no effect whatsoever on anything about your taxes.

If you have a multi member LLC (even if i your you and your spouse, I believe), you will need to do a partnership return that divides the expenses and income to each of the members. Since you're married (sorry if I'm reading too much into "our"), then it comes back together when your do your "married filing jointly" return (again, I may be making an incorrect assumption.)

If you've elected to have the LLC taxed as an S-corp or C-corp matters are more complex

Transferring the property to an LLC, regardless of the type of deed, does violate the due-on-sale clause in your mortgages. Your lender may or may not be OK with that, since its your LLC.

This is all a really good conversation to have with your CPA. Better still with the CPA and lawyer all at once.

You want to avoid a common mistake here. A married couple that own equals shares of a LLC are still partners and a partnership tax return is required. Even though all the income and expenses flow 100% to their joint tax return.

I have had more couples get in trouble for not filing a partnership return than you might believe.