Pay-off NNN mortgage - need an intermetidate LLC

[Ganesh S.]

Hi Everyone,

I am paying off a mortgage for a NNN property that I have bought using LLC name A. My attorney is indicating that it may be better to first create a new LLC B where all my funds would be deposited first and then pay off the bank.

LLC B would also be under my name. LLC A can pay a mortgage to LLC every month, but since both are held in my name I dont see any tax advantages.. Correct me if I am wrong.

Are there any advantages of creating a new LLC just for paying off? Or is it possible just use an Escrow account and pay off the loan while still holding the property under LLC A.

Any advice/comments?

Thanks
GS

[Steven Hamilton II]

Ganesh S.,

It does not sound to me as though there is any point in this scenario to have the second LLC. The reason I say this is you already have the property in an LLC and you can easily create a mortgage with what is currently owed even if you choose to pay it off.

You can loan your LLC the money to pay it off and it can pay you interest; however, if your LLC is treated as a disregarded entity and is on your Schedule E of your tax return there is no point in charging it interest.

There is no point unless the LLC holding the property is taxed as a C-corporation.

A Quit claim deed is for transferring a property from one name to another.

-Steven