Hello All,
Thanks in advance for answers to my questions. I have posted a question here before about the same situation, but this question is a little different, so I wanted to open a new thread. Details (some repeated from before):
MIL died in March of 2023
Wife and I were 50% owners of the house when MIL died
We own the full mortgage but her name is on the deed along with my wife and I
MIL 50% was willed to us
We started renting the property on 10/1
We established an LLC on 10/4
We could not change the property deed to be in the LLCs name since the estate was not settled
We did established a business bank account and are transfer funds from this account to pay the mortgage of the property.
I fear that I have complicated things by establishing the LLC too soon. My question is how to treat this from a tax perspective. Can the rental property be an asset of the LLC - even though the deed is not in the name of of the LLC? I realize that it defeats the purpose of of the LLC (separating business from personal), but can this be "cleared up" in the operating agreement somehow?
Or ... for now should we should assume sole proprietorship and work the LLC as if there are no assets? If I do this, how do I reconcile that the mortgage is being paid from the LLC (Could I treat this as a return of capital to the members?) ... Note: The funds to pay the mortgage are going to an escrow account that is still in mine and my wife's names.
I apologize for the vague and messy question.