I am considering the purchase of a forclosed house which is approximately 80% finished. I will probably try to sell the house after I finish it but if I can’t, I may try and rent it. My question is should I purchase this property under a single owner LLC? I do have several other assets I should protect and I think it may be better tax wise to create an LLC.
Also, is financing under an LLC harder to obtain than personal financing?
Any comments would be appreciated.
As general rule, an LLC is tax neutral. That is, your tax liability will be the same with the LLC as it is without.
Banks don’t lend to LLCs with no credit history. So, since personal creditworthiness will still be considered, it may not be any harder to get your LLC approved for financing. The commercial loan for your LLC will likely be more expensive and have a shorter amortization period than the residential mortgage loan you could get if you take ownership in your own name.
If you want real protection, instead of a feel good plan, you’ll need more than a single member LLC depending on the value of your other assets.
If you start out with just an umbrella policy until your net worth warrants an LLC+trust (or some other combination), are there a lot of issues with moving the properties you own under your name into the new entity? Because the one advantage (even if it doesn’t offer asset protection) I can see of having a single member or just a cookie cutter LLC to begin with is that you start building it’s credit history now.
Fraudulent transfers and DOSC.