If I have two LLC’s, each holding a few properties, can I use profits from one to accelerate mortgage payoff on properties in the other? Is there a legal and tax advantageous way to do this? This is in the state of Texas.
How are the LLCs taxed? That defines that tax treatment. Legally, a business owner can take money out of one company and put it in another.
The problem I see is that you create a nexus between the two. You also run the risk that any money you take out of one LLC can be ordered back if that LLC has a judgment against it. I would have one LLC borrow the money from the other at market rates to avoid any future issues.
Thanks BLL, The LLC’s would be set up for an individual owner. How does the loan thing work when paying off the mortgages?
And this is theory right now. I could just put all in one LLC…
Do you mean a disregarded entity? In that case, the LLCs don’t exist for tax purposes and there are no tax consequences for moving the money. They are pretty much dead for liability purposes too.
Yes
They are pretty much dead for liability purposes too.
Why is that?
The single member LLC has no charging order protection.