Ian, I'm kind of intrigued by this. I'm an investor myself(and maybe we know each other from other boards ;-) ). I own several vacant lots free and clear in the name of an llc, that I own. Would I be able to have my llc sell these lots to me as a person, take back a mortgage and report it to the CRAs?
Yes, the LLC could "sell" the properties, and hold the mortgage. The only hurdle here may be the "reporting cost" to the CRAs. Look into what it will cost to be a reporting information source. Just be aware that the LLC loses these "assets" on thier balance sheet, however you do pick up the "mortgage assets". It depends upon how much you sell them to yourself for....
Another aspect of this "transfer", be aware that you lose the "personal assets protection" of the LLC by transferring these properties to yor own name. This is one of the benefits of creating an LLC.
Bizwiz, thank you, those are valid points. I don't have any rental property and I am planning to sell the lots within the next year, so the protection of the llc isn't that important to me. I also no longer live in the state that the lots are in. I don't really know how to report to a cra and what the cost is, that's what I thought ian had figured out. It might be worth it, if it gives a substantial boost to the score.
It would be worth a phone call to the CRAs to find out the cost (for you) of reporting...nothing to lose. Sounds like you have the other liability aspects covered. However, take a hard look at the "transfer costs" for the properties. You'll have to do a "value analysis" to see if it's worth it.
Bizwiz, you're absolutely right and I wil certainly weigh the cost. In Georgia it's only $ 1 per $ 1,000 value in transfer cost, so that's not a big deal. Increase in taxes would probably not be so bad, as I can set my own salesprice. I just wonder how Ian is handling the reporting. I would think that the CRAs would want the furnisher's ss# and as my LLC is running under my own ss#. He mentioned his title companies, so I don't know, if he means, that his title company is doing the reporting. I'm hoping that he sees this further exchange and gives some tips. Would certainly be worth exploring.
Are there any tax implications in selling it back to yourself? I am a little out of the loop on tax laws, but I'm wondering if it's taxed as ordinary income or capital gains. If the latter, you have to watch short-term vs. long-term.
Oops, you're right, that's not something I had considered. Presently it's long-term capital gains. If I sell it to myself then I would have to pay short term cap. gains, when I sell them next year. That's not worth it then.
Checked it out and since my llc is a single member and it's just pass-through, I would still have the long-term capital gains when I sell, even though I may have transfered membership to myself. So, now again I'm hoping someone or IAN , who started this post, can tell me how to report the the CRAs in an inexpensive way.
I did find out that there a a minimum number of accounts necessary to be able to report to the CRAs, so this is out for me, unless there's a way to have a 3rd party (that's already set up that way) can make the reports. But I guess that's getting more involved than it's worth
Is there any way to "run this mortgage through your bank". Whatever the mechanics were for the OP, it would seem you could take out a mortgage "to pay yourself", and pay it back short term...
Sorry, I was answering bizwiz where he asked you about depreciation. I should have quoted, but didn't.
bizwiz and hedwig, I hadn't noticed biz's comment about appreciation. No, there's no activity on it. Bought with title flaws (knowlingly) and have spent the past 2 years going through Quiet title. Unfortunately, it's pretty impossible to get any kind of loans on vacant lots. Lenders don't want to fool with them, other than hardmoney lenders. And the fact, that I'm self-employed and my credit isn't so great would make it impossible to get a loan, even if it wasn't so rare. If I got a loan from a bank, then they'd report and I wouldn't be looking at this whole scenario ;-).
There must be companies out there who provide this service of reporting for smaller businesses. Property management firms and title companies for instance (related to real estate). I'm sure a search would uncover something. The other option is to contact the original poster, if he has a system, for a fee I'm sure they'd run it through thiers.
There are debt collectors out there who will provide the reporting services for a small fee. They are willing to do that because it keeps the number of accounts they are reporting up and helps retain their ability to report too. I don't know if they would be able to report positive tradelines or not and also the fact they are reporting might not look good either. Might do more harm than good to use them. It may depend on the trade name they are using to report with. If it is easily recognizable as a debt collector then it would hurt badly to use them but if the name they use could be any kind of company then it might work ok.
Thank you. I'll do some googling and see if I find someone who does offer that kind of service. Michaela
