My Fiancée and I own a condo that has been our primary residence until February of this year. We formed an LLC (taxed as partnership) and transferred title of the property to the LLC. It is now tenant-occupied. The mortgage is still in both of our names. We have been paying the mortgage and HOA with rental income, and we spent around $3,000 of our own money to renovate prior to renting the property and an additional $1,000 on plumbing after renting it out before our business debit card was set up.
We have a few general questions:
- Can we deduct mortgage interest, taxes, and insurance costs that are paid through the mortgage if the LLC does not assume the mortgage?
- Will there be any individual tax due from contributing property to the LLC that is subject to a mortgage?
- Can we reimburse ourselves for the startup costs and plumbing? If so, should we just issue an invoice to the LLC for those costs?
- The property has appreciated significantly since we purchased it, from $140,000 to $370,000. Does our initial basis carryover?
