Given the structure of your transaction it is suggested that you work with a CPA and a lawyer to sort out all that is going on. You will want to draft the Operating Agreement in such a way that the people paying the mortgage get the mortgage interest deduction (instead of it being shared by all members.) You use the word ‘comingling’ frequently. With a LLC you have the flexibility for different payment arrangements. You can avoid the problem of comingling if you work out the proper arrangements with your CPA ahead of time. Garrett
My partners and I have set up an LLC to do real estate investing. We have some memebers contributing cash from home equity lines of credit, and some members contributing through getting a mortgage on the property. We were told that after closing, the members with the mortgage could transfer title to the LLC.
Is it considered commingling of funds if the mortgage is in their name, and not in the LLCs name? It is difficult to get a mortgage in the LLC’s name.
For the members with lines of credit, is it commingling if we don’t deposit the cash in the LLC account up front, (so as not to pay on the loan until needed) and instead use the line of credit as needed? Would we need to put cash from the LOC into the LLC bank account each time we needed it before using that money, so as not to commingle?