Llc Initial Contribution
I bought a property a month ago in my name. I just set up an LLC to hold the property. I am going to open a bank account for the LLC. I am going to deed the property to the LLC. Then I have security deposits, and rent to put in the new bank account. Is the property itself my contribution to the LLC? What about the security deposits and rent? Are they my contribution? Do I have to put any of my cash into the account or is the property and rent enough? Thanks.
Thanks! My lender advised me this would be fine before I even bought the property. The property is in my wifes and my name and the LLC is just owned by me. Hopefully this does not require any transfer tax.
The property was leased when I bought it and there was not a problem having them start paying me so I dont think this will be an issue, and I do think the leases allow for this. Any idea on my initial contribution question? Thanks again.
BillFaith is right with the transfer of tax. We have a property going into agreement that we are taking in our LLC name. We are transfering back to our personal name and have to pay both selling and buyers tax stamps.
We were also told that in order to keep a "residential loan" we needed to keep in our personal names.
Kinda stinks.
Your capital contribution to the LLC can consist of the property. Any security deposit is not yours, it is simply held in trust by you (and later your LLC) so this is not a capital contribution. Rent money received prior to the transfer of the property into the LLC is your money, thus a capital contribution; rent money received after the property is transferred is income of the LLC.
The only issue I see is that the LLC must be formed before the property can be transferred into it, and generally an initial capital contribution is required. A nominal amount, say enough to cover the LLC registration cost, is sufficient.
Chris
Chris. Just what I was looking for thanks.
I will let everyone else know if I can avoid the transfer tax. That would suck to pay that!
Dont think we have to but will check. THanks.