My @Quora answer to If I buy an investment property in New Hampshire as a personal asset, how easy is it to transfer…
Answer by Wray Rives:
Yes it is possible, but not necessarily cheap and easy. You need to be sure you understand why you want to transfer the property to an LLC. Most clients I talk to have three reasons for wanting property in an LLC
#1 to save taxes- it won't save you any taxes
#2 to protect their other assets through a limited liability entity-a legitimate reason to put property into an LLC, but to totally protect yourself just doing a simple deed transfer will probably not accomplish what you want to accomplish.
#3 to easily add partners-another legitimate reason.
- The LLC will have to be either formed or registered to do business in NH where the property is located. This will mean annual franchise taxes which you may not pay now.
- You need to actually transfer title to the real estate to the LLC, not just sign a contract for the deed.
- If there is a mortgage, you need to obtain a new mortgage with the LLC as the debtor. (hint: banks don't like to loan money to LLC's they want to loan money to individuals, to make it harder for you to walk away from the property. You can probably overcome this with a personal guarantee of the debt, but you still will need a good relationship with a lender and may have to pay a higher interest rate.)
- If this is income producing property, then you will need to keep your personal finances and the LLC's finances separate.
- If you are adding partners to the ownership of the property, then you probably also need to file a partnership tax return for the LLC.