Multi-Partner LLC Setup/Deed Transfers/Refi's
Hi - I'm a relatively new investor. am currently setting up an REI LLC with 2 other partners. Due to high commercial loan costs to buy properties in name of LLC, we are starting to purchase them individually with intent of quit-claim deeding them into the LLC later (or possibly a Trust with LLC as the beneficiary to avoid Due-on-Transfer conesquences with lenders).
From my research, it appears we will owe RE Excise Tax of roughly 1.75% when we deed properties into LLC in WA state (since neither of the 3 partners are majority, and thus it signifies change in majority ownership on the property).
My questions are:
1) Am i right about the Excise Tax, any loopholes? And are there any other known fees/taxes in addition to the Excise Tax when doing a quitclaim transfer?
2) If we fix the properties up, since the loans are still in the respective individual partner's names, how would a Refi work? would the business do the refi as the Deed owner now, or would the current loanholder (ie individual partner) need to do the Refi, and if so how can we effectively get that money back into the business to cover fixup expenses?
The goal is to run it like a business. our purchases are with the goal of being long-term rentals, so we'd like to have rent income/expenses all run thru the business and share in the equity and cash flow gains equally, but it's challenging to achieve that if we're buying properties individually and then trying to transfer into the LLC. Appreciate any & all feedback!! ??
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