tax implications when moving properties into LLC

[Sheen Jowl]

Hi BiggerPockets,

I wonder if anyone has experience in moving properties from personal name to LLC. The properties stayed on my 1040 Schedule E for a few years and have accumulated loss when depreciation is included. However no loss was deducted against my w2 income because the w2 income is too high. So my questions what to do with these loss when the properties are moved? Do they stay on schedule E? - I doubt because they are associated with the properties. Am I able to keep them as unrealized loss in the LLC and continue the depreciation? - that's the best case because it is better not to add the loss back to the cost basis and start over.

Thank you very much.

[Marcus Auerbach]

LLC's are missunderstood and overrated. Transferring a single residential size asset into an LLC is far from a no-brainer. It comes with drawbacks such as financing risks and does not offer asset protection per se, it just limits the damage to the property like a firewall.

Consider an umbrella insurance instead, you should have one anyway.

There is a place for LLC's in MF and also you will be required to hold property in a legal entity for commercial financing. Don't let the industry sell you something you don't need. Bradon Turner has a good video on YouTube about LLCs - watch that first!