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Should we use MGRM or MGR for our LLC rental property?

Should we use MGRM or MGR for our LLC rental property?

Full question:

My husband and I are trying to put our rental property into the LLC. Should we use MGRM or MGR next to our names, any advantages or disadvatages? Thank you, Pavla

Category: Real Property
Subcategory: Deeds
Date: 04/07/2025
State: Florida

Answer:

It seems you currently hold the property in your names as individuals and wish to transfer it to your LLC. In this case, you would deed the property from your individual names (without MGR or MGRM) to the LLC.

Be aware of the potential for fraudulent conveyance, as defined by the Uniform Fraudulent Transfer Act. A transfer can be deemed fraudulent if:

It was made with the intent to hinder, delay, or defraud creditors.
No reasonable equivalent value was received for the transfer, and the debtor either:

Was engaged in a business with unreasonably small assets, or
Intended to incur debts beyond their ability to pay.

In some situations, a creditor may sue an individual under the alter ego theory, which allows a court to disregard the LLC's separate identity if the individual and the LLC are indistinguishable. Whether this applies depends on the specific facts of your case.

This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.

FAQs

What is the best business structure for a married couple?

The best business structure for a married couple often depends on their specific needs and goals. Common options include a sole proprietorship, partnership, or limited liability company (LLC). An LLC is popular because it provides liability protection and allows for flexible management. Couples should consider factors like liability, tax implications, and management preferences when choosing the structure. Consulting with a legal or financial professional can help determine the best fit for their situation.

What are the tax implications of adding a partner to an LLC?

Adding a partner to an LLC can change its tax status. If the LLC is treated as a partnership, profits and losses are passed through to the members, who report them on their personal tax returns. This can result in a different tax liability than a single-member LLC. Additionally, the LLC may need to file a partnership tax return (Form 1065). It’s important to consult a tax professional to understand the specific implications based on your situation.

Should I put my husband on my LLC?

Deciding whether to add your husband to your LLC depends on your business goals and the nature of your partnership. Adding him can provide shared responsibility and potentially better management. However, it may also expose him to liability and tax implications. If you both plan to be actively involved in the business, it may make sense to include him. Consulting with a legal advisor can help clarify the benefits and drawbacks for your specific situation.

Are married couples considered single members LLC?

Married couples can choose to treat their LLC as a single-member LLC for tax purposes if they file jointly. This allows them to report the income and expenses on their personal tax return. However, they can also elect to treat the LLC as a partnership, which may provide additional benefits. It's essential to consider the implications of each option and consult a tax professional to determine the best approach for your situation.

What is the disadvantage of putting a property in an LLC?

One disadvantage of putting a property in an LLC is the potential for increased costs and administrative responsibilities, such as filing fees and annual reports. Additionally, transferring property to an LLC may trigger tax implications or affect mortgage terms. There may also be challenges in obtaining financing for the LLC. It's crucial to weigh these factors against the liability protection and other benefits an LLC provides.

Should I put my spouse in my LLC?

Including your spouse in your LLC can have advantages, such as shared management responsibilities and potential tax benefits. However, it also means that your spouse may be liable for business debts and obligations. If both of you are actively involved in the business, it may make sense to include them. Consulting with a legal professional can help you understand the implications and make an informed decision.