Personal HELOC for LLC rental - change to LLC?

[Eric Nelson]

Hello, I've found a triplex in Bemidji that's going to work out for mw, but I don't know how the taxes and payments work when using a personal heloc for down payment on an LLC property.

Is there a way to transfer the heloc to the old to streamline the taxes?

If not, do I just take distributions every month to pay that?  Do I pay income tax on that number?

Is there anything I'm missing here, too?

Thanks for your help!

- Eric Nelson

[John Woodrich]

Hard to read what exactly you are asking.

If you are the only member of the LLC it is disregarded for tax. It is the same as you owning it personally.

For your accounting you will essentially have 2 loans, the portion borrowed for the HELOC and the new loan. You can pay both out of the monthly cash flow. Payments on these loans will likely be interest and principle payments, interest is deductible, principle is not. So principle payments from the cash flow will be considered income.

No way to combine these without a refi but that likely isn't possible as a bank will not give you a 100% loan to make it more convenient for you. The HELOC is secured by your personal house, the new loan likely the property.