Taxes? Sell to LLC vs Ref (by Cologero [OH]) May 17, 2018 2:51 PM
Taxes? Sell to LLC vs Ref (by Deanna [TX]) May 17, 2018 3:16 PM
Taxes? Sell to LLC vs Ref (by Cologero [OH]) May 17, 2018 4:47 PM
Taxes? Sell to LLC vs Ref (by razorback_tim [AR]) May 17, 2018 5:01 PM
Taxes? Sell to LLC vs Ref (by Cologero [OH]) May 17, 2018 5:03 PM
Taxes? Sell to LLC vs Ref (by JB [OR]) May 17, 2018 5:53 PM
Taxes? Sell to LLC vs Ref (by Landlord ofthe Flies [TX]) May 17, 2018 7:37 PM
Taxes? Sell to LLC vs Ref (by NC INVESTOR [NC]) May 17, 2018 8:50 PM
Taxes? Sell to LLC vs Ref (by Robert J [CA]) May 17, 2018 11:10 PM
Taxes? Sell to LLC vs Ref (by S i d [MO]) May 18, 2018 4:53 AM
Taxes? Sell to LLC vs Ref (by Marv [IL]) May 18, 2018 5:24 AM
Taxes? Sell to LLC vs Ref (by John... [MI]) May 18, 2018 8:48 AM
Taxes? Sell to LLC vs Ref (by Marv [IL]) May 21, 2018 7:12 AM
Taxes? Sell to LLC vs Ref (by John... [MI]) May 21, 2018 8:39 AM
Taxes? Sell to LLC vs Ref (by JB [OR]) May 21, 2018 8:58 AM
Taxes? Sell to LLC vs Ref (by John... [MI]) May 21, 2018 10:05 AM
Taxes? Sell to LLC vs Ref (by JB [OR]) May 21, 2018 12:40 PM
Taxes? Sell to LLC vs Ref (by John... [MI]) May 22, 2018 7:47 AM
Taxes? Sell to LLC vs Ref (by NC INVESTOR [NC]) May 22, 2018 3:19 PM
Taxes? Sell to LLC vs Ref (by Cologero [OH]) Posted on: May 17, 2018 2:51 PM Message:
Hello,
I only have 2 SFR's but want to start an llc because I plan to grow. I'd like to sell my 2nd unit to the llc as I do not have a mortgage and want to pull out my cash. Is this a bad idea from a tax standpoint? vs. a refi and keeping it in my name (which I really don't want to do)
The ARV is $80-$85K and I have $50K total into it (purchase + rehab). If sell it to my llc, do I as the seller have to pay taxes on the profits above the original purchase price or profits after accounting for the rehab expenses (i.e. profits above $50K)?
Thanks in advance for any feedback --166.170.x.xx |
Taxes? Sell to LLC vs Ref (by Deanna [TX]) Posted on: May 17, 2018 3:16 PM Message:
I had my former primary residence, which was paid off.
When we moved to our current primary residence, we turned our former primary residence into a rental. So we went and stuck it in the LLC bucket. It took the cost of filing papers at the courthouse-- might have been $10, might have been $25, but it wasn't much.
And that was it. Poof, it was transferred.
My LLC is a single-member LLC. My biz taxes are on my personal Schedule E. So as much as I want to keep things separate and keep it as its own entity, the federal government says, "The LLC = You."
Likewise, I took that very house and went to the bank to get a loan against it. But even though it was owned by the biz, I had to personally guarantee the loan. And since I didn't have a W2 job, DH had to personally guarantee me--- even though he had nothing to do with the LLC. So the LLC's income didn't matter; the LLC's collateral didn't matter; and even I didn't matter. What mattered was the fact that my spouse had a job with a paycheck. So that was more blurring that I was trying to avoid.
I'm not saying it's impossible for your scenario to play out... but I wouldn't be able to pull it off in my part of the world. --96.46.xxx.xx |
Taxes? Sell to LLC vs Ref (by Cologero [OH]) Posted on: May 17, 2018 4:47 PM Message:
Thank you for the response. Instead of transferring, I was thinking about selling the home to my llc and then having a mortgage on the llc. I'm basically approved with lender, assuming the appraisal comes in ok of course. --166.170.x.xx |
Taxes? Sell to LLC vs Ref (by razorback_tim [AR]) Posted on: May 17, 2018 5:01 PM Message:
Just transfer title to the LLC via warranty deed and then do a cash-out refinance.
If this is a single-member LLC then it would be like selling it to your self.
Even if you could sell it to the LLC you would be wasting closing costs and transfer taxes. --70.178.x.xx |
Taxes? Sell to LLC vs Ref (by Cologero [OH]) Posted on: May 17, 2018 5:03 PM Message:
Makes sense, but wouldn't the appraisal have a better chance to come in higher with a purchase contract already in place? --166.170.x.xx |
Taxes? Sell to LLC vs Ref (by JB [OR]) Posted on: May 17, 2018 5:53 PM Message:
Even in your scenario you're taking it from one hand to put in the other. No lender is stupid enough to have that contract alter the appraised value. --50.45.xxx.xxx |
Taxes? Sell to LLC vs Ref (by Landlord ofthe Flies [TX]) Posted on: May 17, 2018 7:37 PM Message:
You're trying to make life very complicated for yourself just to achieve the same result. No, the appraisal won't come in higher with a purchase contract in place. Most appraisals happen when there's a contract in place. Furthermore, if the contract price had any weight on the appraisal, then we wouldn't bother getting appraisals. We'd just rely on the contract price. Besides, you're both buyer and seller and that won't affect anything.
If that scenario worked, everyone in high property tax states would sell their houses to themselves for $1 and save a fortune on property taxes. --108.69.xxx.xxx |
Taxes? Sell to LLC vs Ref (by NC INVESTOR [NC]) Posted on: May 17, 2018 8:50 PM Message:
As RAZORBACK stated no reason to sell just transfer the asset to your LLC. Transfer or purchase won't affect the appraisal since a) the property value is what it is and B) the contract is meaningless since it is not an at arms length sale.
--71.75.xx.xx |
Taxes? Sell to LLC vs Ref (by Robert J [CA]) Posted on: May 17, 2018 11:10 PM Message:
Just because someone told you to form an LLC, is no reason to do it! You need to educate yourself on these issues for asset protection.
A friend of mine did not listen and put 3 properties in an LLC. A 10 unit townhouse complex, a 5 unit shopping center and a 4 unit apartment complex. Then when a homeless man injured himself at the shopping center, his free legal aid attorney saw that the LLC owning the shopping center also owned other properties. Of course, then the owner was sued for the entire value of the LLC, 10 million instead of only the 2M value of the shopping center.
So the protection of an LLC backfired and my friend lost out.... Bad advice and bad execution. --47.156.xx.xx |
Taxes? Sell to LLC vs Ref (by S i d [MO]) Posted on: May 18, 2018 4:53 AM Message:
I agree with those saying to just transfer it over to your LLC. You don't want to play games with stuff like this. Lenders are smart enough to know what's really going on, even though you wear the hat of the LLC as the buyer and a private owner as the Seller. No, your appraisal won't come in higher when you sell something to yourself: that's a myth spread by late night infomercial gurus. If it does somehow come in higher, typically it is due to fraudulent activity of the seller who fails to disclose his status as the buyer.
Arms length transactions only. Use the LLC for the purpose for which it is intended: limiting liability.
A simple Quit Claim deed will do what you want, no taxes unless your state has a transfer tax, although you may be able to avoid it since you're still the owner either way.
Consult a CPA. --173.19.x.xxx |
Taxes? Sell to LLC vs Ref (by Marv [IL]) Posted on: May 18, 2018 5:24 AM Message:
You can't sell a property to yourself. --173.15.xx.xxx |
Taxes? Sell to LLC vs Ref (by John... [MI]) Posted on: May 18, 2018 8:48 AM Message:
I just want to clarify something that Sid said (to "Use the LLC for the purpose for which it is intended: limiting liability.").
That is accurate, but only from the right perspective. LLCs were indeed designed to limit liability -- but of NON-MANAGING MEMBERS. They were "intended" to protect members that were not making any decisions and, therefore, shouldn't be liable for the actions of others.
They were NOT designed nor "intended" to be used to limit the liability of managing members -- which is generally the case for LLs (especially in single-member LLCs).
Now, over time, in some states, it has CHANGED into providing some LIMITED protection for managing members. But, again, that was not the "purpose for which it was intended" to be used.
And THAT is still the case in most situations and states today. An LLC can be used as "yet another level of protection" MAYBE -- but it should not be intended to be used as a shield from liability. Again, that is NOT what they were intended to be used for.
- John...
P.S. Large umbrella policy first. Then MAYBE LLC in some circumstances, but probably still better off with some other entity if you really need to limit liability.
--24.180.xxx.xxx |
Taxes? Sell to LLC vs Ref (by Marv [IL]) Posted on: May 21, 2018 7:12 AM Message:
Here is what I tell my clients regarding all LLC, 1120 and 1120s. All these entities must be treated like a separate person. They have their own ID numbers they have their own bank accounts and file their own taxes (except disregarded entities). It must make minutes every year and act like a separate company.
As far as liability, I give them an example. If you do work on the property yourself, the corporate veil can be pierced. If you re-plumb a gas line and it leaks and results in the house blowing up and 3 people die, you can be held personally liable because you improperly did the job of plumbing. If you had hired someone to do the job and it blew up, the LLC may protect you. --173.15.xx.xxx |
Taxes? Sell to LLC vs Ref (by John... [MI]) Posted on: May 21, 2018 8:39 AM Message:
Yes, but if you did NOT have an LLC and hired someone to do the job and it blew up, it would probably be the same.
In other words, even if you hire it out, the LLC likely doesn't "protect" you any more than not having one. Either you are personally responsible or you aren't.
- John...
--24.180.xxx.xxx |
Taxes? Sell to LLC vs Ref (by JB [OR]) Posted on: May 21, 2018 8:58 AM Message:
Hey John, are you going to be at the convention? --50.45.xxx.xxx |
Taxes? Sell to LLC vs Ref (by John... [MI]) Posted on: May 21, 2018 10:05 AM Message:
I am not. Had some relatives sell a place much faster than anticipated (offer accepted within 12 hours), so I am helping my stepmom move from Indiana to Florida this weekend. (Then heading to Cleveland for the Def Leppard w/ Journey show on Memorial Day where I'm doing a bit of "work.") :)
- John...
--24.180.xxx.xxx |
Taxes? Sell to LLC vs Ref (by JB [OR]) Posted on: May 21, 2018 12:40 PM Message:
Nice. I wouldn't mind going to that concert myself if I was near there! --50.45.xxx.xxx |
Taxes? Sell to LLC vs Ref (by John... [MI]) Posted on: May 22, 2018 7:47 AM Message:
It'll be a good show. I do some work with the band, so I'll actually be at their shows in Cleveland, Detroit, Chicago, Newark, and Baltimore this year for sure -- and then probably Vegas and LA depending on how things go.
Always a good time!
- John...
--24.180.xxx.xxx |
Taxes? Sell to LLC vs Ref (by NC INVESTOR [NC]) Posted on: May 22, 2018 3:19 PM Message:
JOHN:"were indeed designed to limit liability -- but of NON-MANAGING MEMBERS." Not sure I understand why you think members are treated differently. As the managing member any additional risk is predicated on their intentionally doing something that is fraudulent, illegal or reckless. And, in that instance, only fully non-participating members might be considered exempt. --71.75.xx.xx |
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