Transfer ownership to an LLC

[George Gallagher]

I bought a duplex in my name and wish to transfer it to the LLC I just created. It is located in Luzerne County, PA.

A more seasoned investor (form outside this area) told me to quit claim the property from myself to my LLC. Simple as going to the courthouse and do a "form and a fee". What I want to know -- and cannot find out -- is this. If I transfer ownership from myself to my LLC, do I also have to pay the real estate transfer tax? Some people tell me "no" and no one has been able to tell me "yes".

Has anyone in here had a similar circumstance?  Thank you in advance.

GG

[Scott Smith]

I see similar circumstances daily as an asset protection attorney. I'm hoping what I'll share with you could save you a lot of time. You're actually set up just fine to make a transfer that won't break the bank. The main reason people are probably telling you not to make this transfer is because they're concerned it would cost you your financing. Most mortgages have a "due on sale" clause that can be triggered by transferring the property directly into an LLC. Investors make a really big deal about the Due-on-Sale clause, but the truth is, we don't need to. There's a pretty simple solution for incorporating your property into the LLC without having to worry about this. I've written a more detailed description that was a featured article here on BP, but here are the basics:
1. Buy property in your own name.
2. Transfer ownership of the property to a Land Trust
3. Incorporate the Anonymous Land Trust into your LLC structure. This is actually more straight-forward than most people think, but it's helpful to have a competent real estate attorney with experience in Land Trusts to assist you.

It's great that you have an LLC to protect your new rental asset. Way to think ahead. Because you made the choice to get an LLC, you won't have to worry about lawsuits as much as someone who has made the mistake of keeping property in their own name. Yes, I know I just told you about a method that involves buying property in your own name, but know that it doesn't stay in your name when you execute this transfer correctly. As a bonus, the Anonymous Land Trust will beef up your protection strategy for this asset while also allowing you a way around that pesky Due on Sale clause.