How to Place Property in an LLC

By Joseph Nicholson

An LLC is a distinct legal entity from its owners, which is what affords protection from personal liability from the business's debts. But this also means that for the LLC to legally own property, it must be titled in the name of the company. Placing property in an LLC is a process of ensuring the LLC is the recognized owner of the asset, but the manner in which this is done can have tax consequences for both you personally and the business.

Step 1

Sell or donate tangible assets to the company. Draw up a bill of sale to confirm the sale. This works well for movable and household goods like computers or desks. As long as the LLC doesn't resell the goods, you don't have to worry about creating an abusive tax shelter by setting the sale price extraordinarily low. If the assets are donated for free, this is a capital contribution that still needs to be reflected in the company's ledger, with the carryover basis for depreciation purposes remaining that of the previous owner.

Step 2

Record a deed to transfer real property. To place real property in the ownership of an LLC, the deed to the property should reflect the company as the title holder. This means drawing up a title deed and recording it at the county recorder's office. Note that if the property is subject to a mortgage, the transfer could trigger an acceleration clause in the mortgage, or may be prohibited outright.

Ready to start your LLC? Start an LLC Online Now

Step 3

Transfer paper assets to the company's account. Cash, stocks, bonds and other paper assets can be transferred from one account to another. Open the appropriate type of bank or investment account in the name of the company and then request to transfer the property from your personal account to the business account. As with tangible, movable goods, these assets can be sold or contributed to the LLC.

Ready to start your LLC? Start an LLC Online Now
How to Transfer Ownership of a Sole Proprietorship
 

References

Resources

Related articles

How do I Create a Holding & Operating LLC?

Organizing as a limited liability company, or LLC, is popular among small business owners because an LLC has the protections of limited liability. The protections of limited liability generally prevent creditors of the LLC from holding the owners of an LLC personally liable for LLC debts. Some business owners take the process of asset protection one step further by utilizing the holding and operating LLC structure. Under the holding and operating LLC structure, all business assets are held by the “holding LLC,” which leases those assets to the “operating LLC” for business purposes. When done properly, creditors of the operating LLC are unable to use holding LLC assets to satisfy the debts of the operating LLC.

How to Add Assets to a Living Trust

A trust allows you to place your assets under the control of a trustee you select, for eventual distribution to the trust beneficiaries. A trust is useless, however, until you transfer assets to it in accordance with appropriate legal procedures. If your trust is irrevocable, its assets are no longer yours -- they belong to the beneficiaries under the terms of the trust deed, even though legal title is vested in the trustee.

How to Transfer a Mortgage to a Living Trust

You and your spouse may have decided to form a living trust, via a trust agreement, to hold your real property or other assets. If you are the mortgagee, or holder of an existing mortgage made by someone else to you, you may desire to transfer that mortgage into your trust as an asset. It may be much more difficult, however, to obtain consent from a lender to transfer a liability, such as a mortgage from a bank or other lending institution, into the trust because it ceases to be an individual liability and becomes a liability of the trust.

LLCs, Corporations, Patents, Attorney Help LLCs

Related articles

How to Set Up an LLC in South Carolina

You set up an LLC in South Carolina by filing a document called Articles of Organization that complies with the ...

Procedure for Change in the Ownership of a Sole Proprietorship

A sole proprietorship is owned and operated under the responsibility of a single owner. All of its business assets and ...

How to Transfer Title to Revocable Trust

A revocable trust is useful largely because it avoids probate proceedings after the death of a settlor. Assets titled ...

Can a Property Owned by an Irrevocable Trust Be Foreclosed?

A living trust is an estate planning tool used to transfer property at death, allowing probate to be avoided. When you ...

Browse by category
Ready to Begin? GET STARTED