Transfer rental property over to my LLC?

Question

I have a rental property with no mortgage that I’ve owned for about four years. I have a new LLC to start my real estate investment business and I would like to know if I should transfer that rental property over into my LLC and the best way to do that?

Hai Loc · Answer

@Tina McDonald

Depends how your LLC is set up for tax implications and liability. Ask CPA

Set up correctly you should be able to take advantage of both..

Tina McDonald · Answer

@jimgoebel

Thanks Jim..If there is not a mortgage on the property and I want the earnings and rental activities all under the LLC business account instead of my own personal account, there are some tax and liability protection advantages in that approach? I have heard both yes and no. Or do I need to create it under a solo 401k or eqrp?

Jim Goebel · Answer

@Tina McDonald

There's a large discrepancy in answers you'll get to this.  Most lawyers will preach the value of an LLC (not surprisingly, right?).  That doesn't make them wrong, though.  For us, we have insurance that we use and count on and own our stuff under our names.

You'll also want to understand the implications of moving to an LLC on your financing strategy.  If you never want to leverage that property, this is probably not an issue, but my understanding is that for a bank to lend with a property as collateral, they are often going to want to see the track record/credit history of that LLC as an operating entity.  It becomes a bit of a chicken and egg thing, when you're starting - because at the end of the day the LLC is only as good as its ability to protect you, and if the deed's recorded under the LLC but you're paying the mortgage out of your account anyways, that's not likely to do a ton of good when it comes time to 'be protected' - see 'piercing the veil.'