All Forum Posts by: Gene Mitchell

I agree, I have been paying mortgages on my rental properties using my LLC checking account. never had a problem with the mortgage company. If your check cashes, they are happy!

Is your LLC a partnership? If so, then it will need to use the form 1065 and issue 10K-1 statements to each partner. If it is a sole proprietorship, then you do not use the 1065. Regardless of the case, an LLC is a DISREGARDED entity as far as the IRS goes. It does not pay taxes. ALL profits and losses FLOW THROUGH the LLC to the owner. You set up an LLC for Liability protection, NOT for tax protection.

Yes transferring a mortgage to your LLC can allow the bank to call the note, but my experience is that many (most?) banks will not do so. Nor do they want to. Why call a performing note? If interest rates suddenly rise, then maybe they might be tempted, but first they have to know that the deed has been transferred in the first place. Personally, I have not heard of any bank calling a note in the past several years in my investment circles. Yes it's a risk, but so is leaving yourself exposed to frivolous lawsuits! Whatever you do, protect yourself and your assets. Personally I place my properties into an LLC AND I carry an umbrella policy! I would also suggest talking to your Banker one on one, explain your intentions, and Guage his feelings on it. It is an easy process to deed the property into or out of the LLC as necessary, should the need arise.

I also am not an accountant, but I think your acct is incorrect. Should be a capital gain. Don't forget that you must recapture any depreciation on figuring the gain. 

I've always considered them to be rental income as well. 

Thanks for clearing that up!  I am aware of UBIT /UDFI taxes, etc. That is what I was referring to...poorly as it were!  Illegal being incorrectly used for "Taxable" in this case!

I am a little confused. Maybe you could explain to me about a non-recourse loan in your self directed IRA? Are you talking about a bank loaning money to your self directed IRA so that the IRA can make investments? I didn't think that was legal.

I would suggest calling some hard money lenders in your area and inquire about their terms. Generally, they charge points up front, have a fairly strict loan to value requirement, and a short term. 

Sounds like a great thread!  Thanks for volunteering your expertise!

if the IRA is providing just a loan for someone to purchase a property, is allowable. Just make sure that it does not provide a benefit to you. For instance if the person was purchasing a property from you and not just any property off the street, then it would be a prohibited transaction because you are benefiting from the IRA loaning the money to the buyer.