Entity/Tax Question

I am currently in the process of buying my first investment property. For tax reasons does it make sense to set up my LLC before i buy or can it wait until after i hold ownership?




don’t look at it as “my LLC”. you’re thinking is not clear when you use that type of language. an LLC is a seperate entity, it’s a hybrid - cross between a partnership and a corporation.

learn what it is and what it means to begin one and you just might open your eyes to their full potential.

the answer is YES, it is definitely better to start an LLC or Corp - ONLY WHEN YOU KNOW WHAT YOU WANT TO DO.

just invest more time into seeing what it is you want to do - how you’re going to do it, and how feasible it is for you to accomplish it.

chances are the LLC is the best way to go, if the purpose of the LLC is to only “hold properties”.

it’s definitely not all cut and dry.

the sooner you can start creating business entities and building credit with those companies, the better.

don’t confuse personal credit with business credit either. two seperate things, although the principle remains the same.

the other part of business credit has to do with - IS THE BUSINESS PROFITABLE.

Makes no difference. The federal income taxes will be the same no matter which path you follow.

i think you’re asking about more than just the tax implications.

it makes a difference when it comes to purchasing the properties. if you’re using lenders to make purchases - you’ll have to personally guarantee loans because LLC has no credit. however, by starting LLC first, then buying, you’ll be able to purchase in the LLC name - thus providing you personally with privacy, maximize your business mindfulness - seperate bank accounts and systems development for running the property(s) -

if you buy in your name, simply “transferring” title to LLC becomes more complex if you have a lender.

technically, you won’t be allowed to do this due to DOSC which will be written into your mortgage from any lender.

you can do it and rely on the performance of the note - as long as the bill keeps getting paid, your loan won’t be called due - however - think about this -

if you were the lender, would you just accept that someone transfers ownership of the property that you have a mortgage against. i know i would not accept this regardless of whether the note’s performing or not. it violates the contract!

Im confused about this, if you apply for a loan under a newly established llc that does not have any credit and you personally guarantee it, what would the loan look like. would it have to be cosigned by the person who started llc? please explain