Accounting Help! Transferring properties between my companies

[Tess L.]

Hi Everyone!

I’m a fairly new investor, I have some accounting questions I hope you can help with, because I’m tying my brain up in knots trying to work it out.

I came racing out of the gates and bought 5 houses in different states (NY, OH, MS, MI) with my AR company. Then I incorporated new companies in OH and NY, and I've just got bank accounts for them. I also have a new WY-LLC as a holding company.

I know I need to transfer the OH property from the AR-LLC to the OH-LLC, and that is not an issue. But what I can't figure out is:

• - How do I account for it? I bought the house using the AR-LLC money (basically capital contribution).

• - Do I have to transferthe purchase price plus rehab costs money for the OH property to the new OH-LLC bank account (from the new holding co, then pay that money back to my AR-LLC for the transfer?

• - That seems the cleanest way, but isn’t the most convenient because getting that cash altogether again isn’t easy (because I’ve spent most of my cash!)

• - If I do transfer the money to the New OH company, is there any way to structure it as a loan, that the OH company has to pay back to the Holding LLC? Would that be beneficial in terms of asset protection strategy?

The second question is about my second NY house, that I bought in the name of the new NY-LLC but was purchased using the AR-LLC funds.

• - Do I have to ‘repay' the purchase price from the NY-LLC to the AR-LLC? I'd have to transfer money from the WY-LLC (holding company) to NY-LLC, and then onwards to the AR-LLC

Sorry for the confusing query, hopefully it’s clear where I’m stuck. Any suggestions for keep my accounting clean and straightforward would be much appreciated.

Cheers,

Tess

[Eamonn McElroy]

The intercompany accounting needs to be figured out, but that might be a minor issue.

Your profile indicates you are a non-resident alien for US income tax purposes (Australian living in UAE).

You own US LLCs, but we're not sure how they're taxed for federal income tax purposes, because you did not specify.  e.g. disregarded entity, partnership, C Corp?

Transferring properties between LLCs might be an issue if they are C Corps.  But -- there may be structural planning opportunity there if they are C Corps.

At a high level, you're creating a lot of nexus and potential filing obligations by buying each new property in a new US state.

Your situation is complicated enough to warrant long-term, professional advisors.

You'll need to consider not only your US income tax exposure and obligations, along with which tax elections and tax entity structuring is most favorable, but also your US estate tax exposure and your tax obligations in your resident country relating to the US situs assets and income.  This is a mine field without competent advisors.

Best of luck.