Mortgage and Tax questions

[Leo Tsang]

I bought an investment property last year in NJ. It was intended to purchase it the form of a partnership. However, due to COVID my business partner was not able to come back to US at the time of closing and the township does not accept his power of attorney without the notary of the US Consulate (the US Consulate in overseas did tell us to get the power of attorney in local High Court which would be equivalent to the power of attorney by the Consulate however our system is not flexible in this matter even in pandemic). So we decided to move forwards and put the property as well as the loan under my name but using both of our partner fund for the down payment. We expected we could get the power of attorney from the US Consulate later on when the pandemic is getting better unfortunately the situation is not improving and he is not able to come back in order to add him to the deed. 

Since setting up an LLC is much easier that it does not require a power of attorney, we are thinking to set up and transfer the property to the LLC. We also consulted with our accountant, she also suggested it would be a much better idea from a tax prospective. Because the partnership is better reflected in this arrangement and it is much clearer in term of tax filing purposes. So I contacted the bank but they said it was not possible otherwise we would have to refinance it to a commercial loan which we may not want to.

My questions are:

1. if it is a good idea for us to transfer the property to an LLC as our accountant advised given our current unique situation?

2. if it is true that I have to refinance to a commercial loan if the property is transferred to an LLC?

3. if anyone has similar experience. How did you get over it? What are the options? Any advice is much appreciated.

Thank you very much.

Leo