If it's paid off, then no problem on the change of ownership. But for tax purposes, you only report "EARNED" income on a SCH C. Rental income is not earned. Basically you don't "do" anything to get that rental income beyond just "sit there" and collect it every month. That makes rental income, passive income. So it's reported on SCH E no matter what.
Many folks have this mistaken belief that putting their rental property into an LLC gives them some kind of "legal" protection for their personal assets, should they be sued by a tenant. That is so wrong and any lawyer who has a clue knows it. The legal protection of your personal assets offered by an LLC is about as effective as carrying bowling balls in a wet paper bag. That so-called "veil of protection" is easily pierced. It also doesn't make any sense, since all Rental Dwelling insurance policies come with an absolute minimum of $300,000 of liability insurance. If you feel the need for more liability insurance, then just increase that coverage and pay for it. It's cheaper than wasting your time (and money) putting rentals into an LLC.
On the insurance issue note also that the type of policy you have matters. I've seen people who converted their primary residence to rental property, yet did not update their property insurance. For your primary residence you have what's called a Homeowner's Policy. Rentals need what's called a Rental Dwelling Policy". So if renting property with a homeowner's policy on it and you file a claim, that claim will most likely be denied because the property is not being used for it's insured purpose. So check that if necessary.
