U have a house with a mortgage if you convert to a LLC as an investment can you deduct the interest ?

investment property with an existing mortgage, u convert it to a LLC can you deduct the interest come tax time, what can u do?U have a house with a mortgage if you convert to a LLC as an investment can you deduct the interest ?
if the property is being held as an investment, the interest is deductible (subject to certain limitations) as investment interest - see Form 4952.





if this property is a second residence, and the mortgage balance is less than $100,000, you can deduct all of the interest as home equity loan interest. There might be issues with the alternative minimum tax, though.





Putting the property into an LLC is only a good idea if you need liability protection. Since a single-member LLC is generally considered a disregarded entity for federal income tax purposes, you will be considered the owner even if the property is in an LLC, so that really won't help you.U have a house with a mortgage if you convert to a LLC as an investment can you deduct the interest ?
When you say convert to investment you would be converting to rental. If itt is a rental then the interest and all other expenses plus depreciation would be allowable. As a rental you could deduct up to $25,000 of loss if your income is less than a certain dollar amount, I think about $100,000 per year. If your income is above the limit then such losses can only be used if you have passive income (rental income) or when you sell the property. If you are a realestate professional then the loss would be deductible each year. A real estate professional is a person who works in real estate related businesses for 750 or more hours a year.


The problem I see is that most states will charge a real estate transfer tax upon the retitling of the property to an LLC. This could be 3% or more of the fair market value of the property at the time you retitle. The rental loss rules apply if you own the property individually or in an LLC.
Even if you do not have an LLC, yet have investment property, the interest would be an expense of doing business and could be deducted.





I do not see how converting your company from a sole-proprietership (what you have now) to an LLC would change much when it comes to taxes. But it has been a long time since I've read tax code, so I could be wrong. Ask a tax professional