LLC And Taxes - Confused!
Hi, I am in the market to purchase an investment property and am confused about the LLC idea. I have a business partner who is not currently working but has about 15k to contribute to the deal. The mortgage on the property (and therefore the title) will be in my wife and my name, since we are working and can get financing. How can I operate the property in partnership with my friend (and somehow register his interest in it) so that I won't pay tax on all the "profits" when half is his etc. Can I get the LLC tax passed through to both of us even if the property is only in my name?
Thanks for any advice.
In order for you to take advantage of the asset protection & tax advantages of a LLC or any entity for that matter, title of the investment property MUST be in the name of the LLC and not in your name or your wife.
Thanks GMacc. Do you know if title can be transferred to an LLC, and if that makes it harder to sell?
Q1. Do you know if title can be transferred to an LLC, Q2. and if that makes it harder to sell?
A1. Title can be and in fact most banks prefer title to be held by an LLC as this provides greater asset protection. However the bank may or may not have issues with your friend also holding title in the LLC.
A2. Yes it is harder to sell if your friend is a partner in the LLC. It is more complicated as now instead of holding this property as tenants in common you are holding it in a partnership. Though if you and your friend own 50% of the property your profits are allocated based on your ownership percentage or 50-50.