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Updated about 13 years ago on . Most recent reply
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Would I get protection from a LLC to manage my properties
Hi my husband and I own 2 rental properties and our personal residence. All mortgages are in both our names. I would like to transfer the rentals into LLCs but I do not think the banks will go for that if I am wrong let me know.
What if we Started a LLC property management company and did all rental property business through that. Would that offer us any protection and would the company require insurance and would it (the insurance) be expensive?
Next question, we currently have earned income that is over $150k so we don't get to take the loss we have after depreciation on the properties, would the llc property managment co. get to take any kind of loss that could pass through to us.
Lots of questions.. Thank you in advance.
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Originally posted by Michelle G:
I am in NY so I would need that license.
The mortgages are with big companies.. Citimortgage and Primelending I think for sure I will further research the moving them into LLC
The loss I thought only was usable to offset capital gains at time of sale but I will look into that.
Thanks again
The transfer of real property to an LLC will, indeed, trigger the "due on sale" clause of a note. That being said, it is highly unlikely that your lenders would exercise the right to accelerate your loan. This is especially true if you transfer the property to an LLC which is 100% owned by the parties to the note. It's very common for property to be transferred to an LLC or a trust for estate planning purposes.
And Mark is spot on about the loss. Any loss that you cannot take is carried forward as a "prior year unallowed loss." If it cannot be used the next tax year, it will continue to be carried over until the passive activity is disposed of.