New LLC-rent From LLC After Purchase?
Long story short...buddy and I have formed an LLC with 30K in an account. I am in the military and move very often in high rent areas (military bases). Our plan is to buy one in the very near future, where I will live for about 9 months then move. I have secured the financing under my name and plan to quit deed it to the LLC. Then I would rent the property from the LLC, making my monthly payments to it...we are new to this...does this make sense? Any gotchas? This quit claim thing easy to do? Do I need a business license for the state we purchase in? Again...new to all of this, any help would be much apprciated!
Just a thought, why quit claim it to the LLC right away? The "rent" you pay to your own LLC is likely to be considered income to you and/or your LLC depending on your tax election for the LLC. this only makes sense if you are trying sheild your income from something.
Why not wait until you move, transfer the property to the LLC, and show any equity as a capital contribution to the LLC which you can withdraw tax neutral later?
Though you will want to spend time checking out local property management companies so you will know which to choose should you have to leave suddenly or in nine months, etc.
[ Edited by Mantis on Date 05/12/2005 ]
Mantis...I know its been a while since I posted this...thanks again for that reply. Lots of great information. I still hold the property in my name, and I returned to this reply to get with my attorney/accountant and ask all of the stuff you brought up. Now just juggling with the risks of quit claim/new insurance blah blah. Any ideas on just fessing up to the mortgage company and having both parties (he and I) personnally guarantee the loan and have them be good with it, or will I need to operate in the "grey" quit claim arena on the down low?