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Ratings. Guidance. The Right Lawyer.
If there is a line of credit (LOC) on a property that will be transferred to a LLC, will the obligation of the LOC transfer too?
Cincinnati, OH
Viewed 14 times.
Posted 26 days ago in Real Estate
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I plan to transfer ownership of a house (no mortgage), that will be rental property, to my LLC. I would like to open a LOC to have available for repairs and possibly to use towards purchase of more property. I have read recently that I should set the LOC up personally and not under the LLC to receive a better rate. I went to my local bank (CHASE) and they agreed. Once the LOC is set up and I then transfer the property to the LLC will the obligations of the LOC follow the property into the LLC? What kind of tax impact will this have either way this goes?
Answers (1)
Faye Danielle Cox
This attorney is licensed in Ohio.
Posted 25 days ago.
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If your line of credit is secured by a mortgage on property that is personally owned and you intend on transfering the personally owned property into the LLC, then you may violate the due on sale cause of the mortgage which would say that once your transfer the property the entire balance outstanding on the LOC would be due. If the LOC is unsecured than it remains a personal debt to you which you are using for the business.
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