Transfer Rental into LLC

[kludge]

New to this topic. 

I have a client who is 80 years old and has been reporting his 30 units apartment rental for over 30 years and now wish to transfer it to his LLC.  Fully paid for, of course. 

(1)Do I just simply create the LLC and report everything on the LLC going forward or is there extra steps BEFORE this?

(2)Do I have to transfer and record the TITLE with the local county indicating the LLC as the NEW owner of the apartment?  If so this could cause property tax to increase being a NEW ownership and lose the grandfathered lower property tax he is enjoying.

 

Thank You.

Sean

 

[jklcpa]

32 minutes ago, kludge said:

I have a client who is 80 years old and has been reporting his 30 units apartment rental for over 30 years and now wish to transfer it to his LLC.  Fully paid for, of course. 

(1)Do I just simply create the LLC and report everything on the LLC going forward or is there extra steps BEFORE this?

(2)Do I have to transfer and record the TITLE with the local county indicating the LLC as the NEW owner of the apartment?  If so this could cause property tax to increase being a NEW ownership and lose the grandfathered lower property tax he is enjoying.

 

Are you an attorney? If not, you shouldn't be creating the entity or transferring titles, but maybe that is not what you meant. 

For #1 - IF this is a single-member LLC then it is a disregarded entity (the default) for tax purposes and will continue to be reported on the 1040 seamlessly as before unless an election to be taxed as an S corp is made.  

For #2 - it would be helpful to know the jurisdiction so that other members in your locale might chime in. Is this in CA?   Fwiw, in my county, entities other than individuals such as LLCs, family partnerships, and grantor trusts do record deeds in the entity's name, and these entities are not allowed the tax breaks in property and school taxes that are available for individual owners to apply for. 

Edited October 4, 2018 by jklcpa
typo

[Lee B]

4 hours ago, kludge said:

 

 I have to transfer and record the TITLE with the local county indicating the LLC as the NEW owner of the apartment?  If so this could cause property tax to increase being a NEW ownership and lose the grandfathered lower property tax he is enjoying.

 

Thank You.

Sean

 

Voila, you have answered your own question.

[Max W]

Proposition 13 which capped property taxes in CA, was enacted in 1978, 40 years ago.  So, if the client's property was acquired 30 years ago, it probably won't have Prop 13 protection.