Rental Property Under LLC

[jercunard]

My husband and I purchased our property as a primary residence in 1999. It is now used as a rental, and we would like to put it under an LLC. What are the steps to doing this, and if we proceed, will the mortgage company make the loan due in full? Are mortgage companies supportive of transferring to LLC?

 

[dee_dub]

Doing it is easy. Form an LLC, and sell the property to the LLC.

The mortgage company will almost certainly require you to pay the loan. Selling invariably triggers repayment. Lenders are not "supportive" of transferring properties to anyone: the property is their security for the loan. If you no longer own the property, the lender no longer has any security.

The lender would probably consider allowing you to transfer the mortgage to the LLC as well, but would likely require you and your husband to personally guarantee the loan.

You also may face income tax consequences from transferring the property.