Transferring title from self to LLC

Guest 0.10 Dollars($)

I have heard pros and cons about doing this. Does anyone have solid reasons why this would be good in the long run. Our finance guy says it is always good to have your rental investments under our LLC. Thoughts?

jameshogg · Posted: Fri Jun 23, 2006 2:02 pm Post subject:

Hi Jim,

LLC offers an alternative to partnerships and corporations. It combines the advantages of limited liability with the partnership advantage of pass-through taxation.

The main advantage of Limited Liability Company is that the earnings of a LLC are taxed only once. The earning is treated in a similar way as in partnerships.

The other advantage includes limited liability for the member as the liability of a member is limited to the amount of money which the he has invested in the LLC.

James

Samantha

Hi Jim,

Welcome to MortgageFit Forums.

I guess I understand the reason your financial advisor is advising you to transfer all your rental properties to a LLC or Limited Liability Company. LLC is recognized by the states as providing liability protection for its members.

The treatment with LLC in case of tax is different compared to other corporations. There is no double taxation as there would have been if you as an investor would have created a Corporation. The flexibility here is also much more in structuring relationships between members.

The main reason to form a LLC is it offers liability protection. When you buy a rental house all your personal assets is at risk if something goes wrong like a dispute with your renters.

Also if your insurance is not enough to cover up any possible damage then again your asset will be at risk. These risks are eliminated in a LLC where only the assets owned by the LLC are at risk in case anything goes wrong. Your life savings are saved.

There are some disadvantages also with the possibility of losing pass-through taxation in case the LLC is not structured in a proper form. Also it involves a lot of paperwork and documentation than in ordinary partnerships.

Check for the reasons and understand them clearly with your financial advisor before you decide to transfer.

God bless you.

For MortgageFit,
Samantha

blue · Posted: Fri Jun 23, 2006 2:44 pm Post subject:

LLC can be formed by any layperson and there is no legal requirement to form it under an attorney. But it is always recommended to take the help of an attorney as there is lot of documentation to be filed properly.

ckalvesmaki · Posted: Tue Jul 11, 2006 9:35 pm Post subject:

Jim you may violate the terms of your note and the lender can call the note due.....please read your closing package it is addressed in the note and your deed of trust........

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