I have used a personal HELOC to fund my investment business. I just recently opened an LLC. Since my entire HELOC debt has documentation that it was used for my business, is there a way to transfer that debt to my LLC to free up my HELOC?
If the HELOC is secured by your primary residence, then the home mortgage interest deduction on your Schedule A is limited to the interest you pay on the first $100K of your HELOC.
you (personally) can loan the money to the LLC.
promissory note, interest, payments, the whole deal.
But can that be traced back to 1+ months prior to opening your LLC?
What I mean is even though you may have used your line of credit prior to opening your LLC can you say here is a loan for $xxx that I used i september but now I wqant to use that for my newly opened LLC?
It does not matter to the IRS what you did with the loan proceeds. You can only take a home mortgage interest deduction on Schedule A for the interest you pay on the first $100K of the HELOC secured by your primary residence.
If you use some or all of your HELOC money to make a personal loan to your LLC, then your LLC can take a business interest expense for the interest it pays you on your loan to the LLC. You turn around and show interest income on your 1040 for the loan interest the LLC pays you.
If the LLC uses some or all of its loan money to start the business, then the IRS has rules concerning amortization and deductibility of the business start up costs.