Taxes On Land Trust?
When you buy a property and you either have it quit claimed or transferred into a land trust(w/ the beneficial interest assigned to you); do u notify the IRS of the transfer? If so how do u notify them? Do you pay any taxes on the transfer?
Energy:
nice to meet you!
you asked -
When you buy a property and you either have it quit claimed or transferred into a land trust(w/ the beneficial interest assigned to you); do u notify the IRS of the transfer?
No the trustee does. If you are the trustee then nothing has really changed.
If so how do u notify them?
see answer above
Do you pay any taxes on the transfer?
depends on which State you are in...I believe PA, WA or OR (I think) treat transfers into trusts as taxable www.transactions.CHECK with your State (AZ) just to be safe
As long as you name yourself as the beneficiary to the trust, you do not need to inform the IRS. The IRS accepts this as an "estate planning" mechanism. You could then prepare an addendum to the trust assigning 100% of the beneficial interest to your LLC. Neither the trust agreement nor any addenda to the trust are ever recorded -- but should be notorized.
You also do not need to inform nor get permission from your lender to place the property into a revocable land trust. Lenders can not, by an act of Congress, deny you the right to place property into a trust.
You do however need to inform your insurance agent to add the trust and the name of the trustee as additional insureds.
Hi ledris,
I think you are right on. The proper ownership entity should be named as the first-named insured. Any other "creative way" around the issue could not only place the LLC "veil" in jeopardy, but also the insurance coverage itself...
Have a great weekend.
Tim
For some reason people do not talk about the cons as much of using a LLC. I myself do not consider the extra cost worth it. And there are so many ways a good lawyer can still get thru the LLC protection.
Beside setup you have the extra cost of commerical insurance and loans, seperate tax returns and bank account.
Example: with the hundreds of people on these forums how many have said they have been sued to begin with.