Posted by Roger Garay E.A. on June 27, 2004 at 22:34:25:
I am confused. If the LLC “…has the two properties in its name…” then it DOES have assets and CAN get loans (albeit personally guaranteed by yourselves if the property income is insufficient to qualify the loan). The pass-through issue merely keeps the LLC from paying taxes on operating profits in that it passes them through to you. If the properties are in your name then the LLC is an empty shell. What am I missing here?
1031: LLC consideration - Posted by Gary
Posted by Gary on June 27, 2004 at 06:29:09:
Hi, my wife and I have done several 1031 exchanges. With this one, there is a new wrinkle, and I am not sure how this problem (if there is one) can be solved.
We have two properties we want to exchange for one property. The issue is that our LLC (called “Garlind,” “owned” by my wife and me, Gary & Linda), has the two properties in its name. Garlind is a passthrough; we are the two sole owners, and we file taxes jointly. Garlind has been in existence about six years.
We know that we cannot get a mortgage with Garlind because technically, it has not assests and no income (we have tried before); but we can get a mortgage in our own name. We want to do quit claim deeds on the two properties, then buy the one replacement property in our names and get a mortgage on it. Thus, the properties would flow from one name to the same name. Eventually, we would file another quit claim deed on the replacement property and put it into Garlind soas to protect it.
Are there problems with this? Are there solutitions to the problems, if there are? We live in CT; the replacement property is in CT. The two properties we are selling–one is in CT, the other in NV.
Thanks! Gary