If you’re a real estate investor, landlord, or business owner, you may be wondering how to protect your property from liability or simplify your tax strategy. One of the most popular methods is to transfer your property into a Limited Liability Company (LLC).
But how do you actually put property in an LLC?
In this guide, we’ll walk you through the full process — including legal steps, tax considerations, and what to avoid when moving real estate into your LLC.
Why Put Property in an LLC?
Transferring real estate into an LLC offers several benefits:
- Limits your personal liability
- Separates business and personal assets
- Enhances privacy
- May offer tax advantages for investors
- Simplifies estate planning and ownership transfers
Common examples of property placed into an LLC include rental homes, commercial buildings, vacation rentals, and undeveloped land.
🧾 Step-by-Step: How to Transfer Property to an LLC
Step 1: Form Your LLC
Before you can transfer property, you’ll need a legally registered LLC. This includes:
- Choosing a business name
- Filing Articles of Organization with your state
- Getting an EIN (Employer Identification Number)
- Creating an operating agreement
- Complying with state-specific requirements
Note: If you already own property and are forming the LLC now, title transfer will be required.
Step 2: Draft a Property Deed Transfer
You’ll need to transfer ownership of the property from yourself (or your company) to the LLC. This is done with a legal document called a deed. Common types include:
- Quitclaim Deed: Simple and often used for transfers with no warranties
- Warranty Deed: Offers stronger guarantees about the property’s title
A real estate attorney or title company can help prepare and record the deed.
Step 3: Record the Deed with the County Clerk
Once the deed is signed and notarized, it must be recorded in the county where the property is located. This makes the LLC the official property owner.
Recording fees vary by state and county.
Step 4: Notify the Lender (If Applicable)
If the property is mortgaged, your loan may include a “due-on-sale” clause, which could trigger repayment if ownership changes. Before transferring the title:
- Review your loan agreement
- Notify your lender of the transfer
- Request written permission or restructure the loan under the LLC
Failing to notify the lender could result in loan acceleration or legal penalties.
Step 5: Update Lease Agreements and Insurance
If the property is a rental:
- Update lease agreements to reflect the LLC as landlord
- Notify tenants of the change
- Ensure rent is deposited into the LLC’s bank account
Also, contact your insurer to:
- Update the property insurance policy under the LLC’s name
- Ensure adequate liability coverage
Step 6: Maintain Proper LLC Compliance
Once the property is in the LLC, maintain clear separation between personal and business finances. Be sure to:
- Open a business bank account
- Keep detailed financial records
- File annual reports and taxes (if required by your state)
This ensures the LLC remains valid and your liability protection stays intact.
Tax Considerations When Moving Property to an LLC
The IRS generally treats transfers of personally held property into a single-member LLC as tax-neutral. However, for multi-member LLCs or if the LLC is taxed as a partnership or corporation, there may be:
- Transfer taxes or capital gains (in rare cases)
- Reassessment of property value (for tax purposes)
- Documentary stamp taxes (in certain states like Florida)
Consult a CPA or real estate tax advisor before initiating the transfer to avoid surprises.
Pros and Cons of Putting Property in an LLC
Pros:
- Protects your personal assets from lawsuits or business liabilities
- Helps with estate planning and ownership transfer
- May improve credibility with tenants or investors
- Easier to manage rental income and business expenses
Cons:
- Possible lender complications (due-on-sale clauses)
- Transfer taxes or fees in some jurisdictions
- May affect your ability to qualify for homeowner tax exemptions or financing
Final Thoughts
Transferring property into an LLC is a smart move for many real estate investors and business owners — but it must be done correctly. With the right legal and tax guidance, putting property in an LLC can help protect your assets, reduce liability, and simplify ownership.
At FormLLC, we help clients nationwide form LLCs, obtain EINs, file BOI reports, and manage compliance. Whether you’re starting a new LLC or transferring property to an existing one, we make the process fast and affordable.
