Tax Handing Q's - LLC vs Prop. in Your Name (Due-On-Sale Issue)

[Bill Willis]

Afternoon,

I recently purchased another single family home to live in, but I still have my condo that I own and want to start renting out. I've done a bit a research around LLC's and creating one - (unfortunately, I didn't think to create one prior to buying my condo...blah...)

I bought my condo about 8 years ago and have been diligently paying my mortgage payments. This month as mentioned above, I purchased another home to be my primary residence. My plan is to rent it out my condo next year. However, I would like to write off my business expenses for this and treat it is an actual business.

My plan was to formulate an LLC and roll my condo up under that through a title transfer. Unfortunately, when I called my mortgage lender they told me, if I went this route, it would trigger the due-on-sale clause. This would put me in a very challenging position to have to completely repay this mortgage.

My question: Since transferring my rental property under my planned LLC would not be an option. One of the options I considered was utilizing an umbrella insurance policy for protection. However, with this:

1.) How am I able to write off business expenses that are incurred through my rental property if I can't use a business type entity? 

2.) Also, am I able to get a business credit card (expenses) / bank account for rental (deposits)?

I feel kinda stuck.. Help? lol

Thanks for the future feedback everyone

-Bill