My first investment property - seeking advice - Posted by Ed
Posted by Ed on July 18, 2002 at 23:04:27:
Let me begin by saying this board is a tremendous resource. I’ve learned a great deal just by lurking and reading this board. My thanks goes out to all posters. Now onto my question…
My brother-in-law and I formed an LLC for the purpose of holding and managing rental property. Our first rental property will be my brother-in-law’s current home. (He is moving at the beginning of August into another home). We are planning to quit claim the property from my brother-in-law to our LLC to retain the favorable mortgage agreement. We have a pretty good handle on how to avoid the due on sale clause with a land trust, and we have an attorney handling the filing process.
My specific question is how do we account for the “sales transaction”? That is, because we are quit claiming the deed, no formal settlement statement will be produced showing the purchase price paid by the LLC for the property. (We do, however, have an appraisal). With this in mind, what document would you use to establish a cost basis in the property for the LLC? Should we draw up a sales contract on the property? Any advice would be greatly appreciated.
Thanks in advance.