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How to place property in an LLC

A blueprint of a real estate building plan alongside legal documents representing the process of forming a real estate LLC

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Thinking about how to place property in an LLC but unsure of the process or where to begin? Many people transfer personal assets and valuables to businesses for tax and financing advantages.

Placing your belongings in a limited liability company is a straightforward process that requires due diligence. Although the stages are easy to understand, you might need to consult a tax lawyer to avoid issues with the IRS.

Ready to discover the methods of transferring your property to an LLC with proper documents? We’ll discuss the steps more in-depth to end misinformation and improve your knowledge.

Should I put my property in an LLC?

Placing assets in an LLC is a strategy for real estate investors and new businesses to gain property protection for legal purposes. A limited liability company helps shield entrepreneurs’ valuables from lawsuits.

You may benefit from additional financing opportunities for operating a real estate business under an LLC. The screening process is straightforward, and lenders might allow you to sign loan documents with your name. It also makes you liable for the repayment.

Another reason to put properties in an LLC is to improve your business. New startups need assets to function appropriately, and owners make capital contributions such as cash and personal valuables. They get equity in the company as a reward for providing the resources.

Putting properties in LLC benefits professionals as working with an official name improves client trust. You’re more likely to work with registered entities.

Several factors determine whether placing your rental property in an LLC is profitable. Although it might improve the chances of getting a quick loan, there’s a risk of potential liability exposure.

You can place your valuables in the business by filing a few forms and following good accounting practices.Discuss forming an LLC pros and cons with an accountant and get guidance from a professional lawyer before initiating the process.

Transferring personal property and cash to an LLC

You can place properties such as vehicles, home equipment or tools in a limited liability company registered in the same state. The process is straightforward but requires following due diligence to avoid legal liabilities. Follow the below steps to transfer your belongings to your business:

Research the market value

Whether placing office items, artworks, cars, or equipment, consider researching the item’s market value before transferring it. Gather as much information about the current valuation of the personal property from competitors and document everything.

Keep records

Another crucial step when transferring personal property or cash to an LLC is record keeping. Outline the asset, its fair market value, and purchase price in the operating agreement when putting it for a stake in the company.

Keep the transaction records in your accounting ledger if the company makes cash payments. When moving vehicles, ensure you properly transfer the titles and get the lender’s approval before initiating the process if it’s a loan.

If you have no business accounting knowledge, consult a business lawyer or an accountant to document your activities properly.

Complete an assignment of property

The document transfers the title of your automobile, artwork or office items to the LLC. If you’re unfamiliar with the process, talk to a lawyer and have them file your property assignment. Ensure your decision before completing this form, as there’s no turning back.

Transferring real estate to an LLC

Forming an LLC, completing a quitclaim deed and keeping records are ways to transfer real estate to your business. It’s an easy process, and below are ways to achieve success:

Form an LLC

You can’t place a real estate property in a limited liability company without forming a legal entity. The process can become complicated for those without the state rules and regulations or unfamiliar with proper documentation.

Forming an LLC requires registering a business name and visiting the secretary of state’s office to file the necessary paperwork.

If you’re new to the process, consult a professional familiar with the required documents, especially if you have partners. You’ll learn partnership paperwork basics and how to structure the company.

Complete a Quitclaim Deed

Get a quitclaim deed or warranty form valid in your state, or let your lawyer prepare the document. It indicates that you’re passing your interests in the property to your LLC.

This process makes you the grantor while your business becomes the grantee. Your state might have laws guiding compensation for the transfer from one party to another, so get the necessary information before proceeding.

Sign and record the Quitclaim Deed

Sign the deed and ensure there are witnesses, as many states demand. After the signature, take your document to the county agency handling real estate property records.

The documentation creates a public record indicating the property transfer, putting the world on notice. You can also amend your lease, letting your tenants know that the building now belongs to the company.

Consider creating a business bank account and managing the rental property income and expenses through the LLC financial statements.

Wrapping up

Still thinking about how to place property in an LLC and why? Transferring your assets or real estate property to your company has tax advantages and offers liability protection. You also benefit from different financing options, improve business professionalism and build client trust.

Consulting a tax and business attorney before putting property in an LLC is excellent. You’ll get first-hand advice about the process basics from experienced professionals, making documentation easy.

Lawyers are also great at reviewing all documents regarding the business, which helps you avoid legal pitfalls.

About Author

Picture of Rick Mak

Rick Mak

Rick Mak is a 30-year veteran businessman, having started, bought, and/or sold more than a dozen companies. He has bachelor's degrees in International Business, Finance, and Economics, with masters in both Entrepreneurship and International Law. He has spoken at hundreds of conferences around the world during his career on entrepreneurship, international tax law, asset protection, and company structure. Business Anywhere Editorial Guidelines

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