Deeding a Rental to a LLC
I am currently own a property for primary use, but want to convert it to a rental (it’s a condo). I want to hold the title to the condo in a LLC to limit my liability while it’s being rented. My question is if 1) this will effect my current mortgage, 2) what effect will…
I am currently own a property for primary use, but want to convert it to a rental (it’s a condo). I want to hold the title to the condo in a LLC to limit my liability while it’s being rented.
My question is if 1) this will effect my current mortgage, 2) what effect will this have on my insurance policy and 3) what exactly is involved in the transfer?
I have read that it is simple as long as the LLC is owned solely by me as well.
Does anyone know about this?
Likely, it will be treated as a sale for mortgage and tax purposes, which will involve a bunch of closing costs that are just money down the drain. My suggestion would be to talk to a real estate attorney first, but take out a landlord’s insurance policy that covers the liabilities you might be exposed to – this will be far cheaper than setting up a LLC and transferring title to it. Your mortgage company might not be thrilled at the idea of you transferring your obligations to a LLC.
Back-up. What does “I am currently own a property for primary use, but want to convert it to a rental (it’s a condo).” mean?
Are you forming a LLC because it says so in the By-laws? In my experience, if you own a condo & want to rent it out, you just do so. However, if you own a condo currently under your name as owner & now you want to put the condo under an LLC, that is a separate issue, which can be done.
What I am trying to say, you do not need to put your condo under a LLC to rent it out. By you subletting your apartment, it may hurt a potential owner’s mortgage, but not yours. Speak to your insurance broker about the insurance ramifications.
Get an attorney to file the LLC papers if you want to take the condo out of your name into a LLC.