Investors often hear that transferring ownership of a rental property into a limited liability company (LLC) is a smart move for asset protection. And it is—when done correctly. But if you follow common internet advice and simply “quitclaim deed” your property into an LLC, you could expose yourself to serious risks:

• Clouded title
  
• Triggered mortgage acceleration
  
• Unexpected transfer taxes
  
• Increased property tax assessments
  

In this guide, I’ll show you exactly how to structure the transfer of rental property ownership to an LLC the right way—step by step—so you can maximize asset protection while avoiding costly legal missteps, unexpected tax implications, and financial surprises.

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Why Move Rental Property Into an LLC?

Before we dive into the process, let’s cover why real estate investors choose this strategy:

• Asset Protection — Shields your personal assets from tenant lawsuits or property-related liabilities.
  
• Anonymity — Proper structuring can make your ownership less visible in public records.
  
• Estate Planning — Easier to transfer ownership of an LLC than individual property titles.
  
• Business Credibility — Establishes a professional business entity structure for your real estate investments.

Why a Simple Quitclaim Deed Is a Big Mistake

You’ll often hear that transferring a rental property into an LLC is as simple as filing a quitclaim deed. But this is where bad advice leads many investors off track.

A quitclaim deed is a simple legal document that transfers whatever ownership interest you might have in a property—without offering any guarantees that the title is clear or that you fully own the property. In other words, when you use a quitclaim deed, you are essentially saying:

“I am transferring any interest I may have, but I make no promises that the title is clean or free of issues.”

Why This Creates Problems

Using a quitclaim deed to transfer property into an LLC can cause serious problems:

• You cannot obtain title insurance on a property transferred this way, making it difficult to sell or refinance in the future.
  
• There is no warranty of ownership—you are not legally confirming that you hold a clear and marketable title to the property.
  
• It creates a public record trail that directly links you to the LLC, undermining any anonymity you may want to maintain.
  
• It signals poor legal structuring to attorneys, title companies, and future buyers, raising red flags that could complicate transactions later.

What You Should Use Instead

To properly transfer ownership and maintain legal protections, you should always use a warranty deed (or a grant deed in states like California). A warranty deed guarantees that you hold clear title and that you are legally transferring full ownership of the property. It also allows you to secure title insurance, protects your ability to refinance, and preserves the integrity of your LLC structure.

Want to make sure your next property transfer is structured the right way? Join us at the Tax & Asset Protection Workshop—a full-day, expert-led seminar where you’ll learn the exact legal and tax strategies savvy investors use to safeguard their properties, reduce tax liability, and protect their assets. You’ll walk away with actionable tips you can implement immediately—plus the opportunity to get your questions answered live.

Key Questions to Ask Before Transferring Property to an LLC

First, you need to determine whether there is a mortgage on the property. If there is, you must proceed with caution. Transferring a property that is still under mortgage into an LLC can potentially trigger the lender’s due-on-sale clause. This clause allows the lender to demand full repayment of the loan or force you to refinance the property, often at a much higher interest rate than your original terms.

Next, consider when the mortgage was placed on the property. Mortgages that originated before 2022 typically offer significantly lower interest rates, often in the 4-5% range. In contrast, refinancing in today’s market could mean securing a new loan with rates as high as 8-9%. This difference represents a substantial financial burden, making it crucial to evaluate timing before transferring ownership.

You must also find out who owns your mortgage. If your mortgage is owned by Freddie Mac or Fannie Mae, you may have more flexibility. Both entities permit transfers of property into LLCs under their current guidelines. To verify mortgage ownership, you can use the Freddie Loan Lookup Tool or the Fannie Loan Lookup Tool online by entering your property details. If your mortgage is indeed owned by Freddie Mac or Fannie Mae, you generally have a green light to proceed with the transfer using a proper warranty deed. However, if your mortgage is not owned by either, transferring the property into an LLC could still trigger the due-on-sale clause, leaving you vulnerable to the risk of forced refinancing under much less favorable terms.

Other Tax and Fee Considerations

Even if you’ve confirmed that your mortgage allows a transfer to an LLC, there are still additional tax and fee considerations to keep in mind. Two of the most common and often overlooked issues are transfer taxes and property tax reassessments. These costs can catch investors by surprise if they are not addressed up front.

Transfer Taxes

Many counties and states impose a transfer tax whenever real estate ownership changes—even if you simply move the property from your personal name into an LLC you control. These taxes can vary widely in structure and amount depending on your location. For example:

• Pennsylvania: The state assesses a transfer tax based on the full property value at the time of transfer. This can be a substantial percentage of the property’s market value, creating an unexpected expense.
  
• Florida: In contrast, Florida applies a transfer tax based on the amount of the existing mortgage on the property. If you have a large mortgage, this tax can also add up quickly.

Every state and county has its own approach to transfer taxes, so it is essential to research your local regulations before moving forward with a property transfer.

Property Tax Reassessment

Another important consideration is the potential for property tax reassessment. In certain states, moving property into an LLC can cause the local taxing authority to reassess the property’s value. This is particularly problematic in states that impose tax caps.

For example, if your current property taxes are capped at 5% annual increases, but the local market has driven the actual property value much higher, transferring ownership may trigger a reassessment to full market value. If your property was originally taxed based on a $200,000 valuation but is now worth $400,000, the reassessment could double your property taxes. Understanding whether your state or county will reassess property taxes upon transfer is critical before making any moves.

The Smart Way to Move Property Into an LLC: Use a Land Trust

If your due diligence reveals either of the following risks:

• Your mortgage is not owned by Freddie Mac or Fannie Mae, and therefore, transferring directly into an LLC could trigger the due-on-sale clause
  
• There are transfer tax or property tax reassessment risks in your state or county
  

…then the safest and most effective solution is to use a land trust as an intermediary.

How a Land Trust Works

A land trust offers both flexibility and privacy for structuring real estate ownership. The process typically looks like this:

1. Set up a land trust with anonymous ownership
   When forming the land trust, it is important to select an independent trustee—not yourself. This ensures that your name is not directly tied to the property in public records.
   
2. Transfer the property into the land trust using a warranty deed (or grant deed, depending on state)
   This step moves the property from your personal name into the land trust while maintaining clear title and protecting your ability to obtain title insurance.
   
3. Assign the LLC as the beneficiary of the land trust
   Once the LLC becomes the beneficiary, it gains the full economic and control benefits of the property while shielding your personal identity and reducing liability risks.

Why This Works

Using a land trust in combination with an LLC provides several strategic advantages:

• Avoids the due-on-sale clause
  Many lenders do not consider a transfer to a land trust a violation of the mortgage terms, reducing the risk of forced refinancing.
  
• Avoids transfer tax in most states
  In many jurisdictions, moving property into a land trust does not trigger the same transfer taxes as a direct move to an LLC.
  
• Preserves property tax caps
  Because the beneficial ownership does not change on the public record, this structure often prevents triggering a property tax reassessment.
  
• Maintains owner anonymity
  The land trust keeps your name off public record, enhancing privacy and reducing legal visibility to potential plaintiffs.

Important Notes

While this strategy is highly effective in many jurisdictions, it is not a one-size-fits-all solution. There are some important exceptions to be aware of:

• Pennsylvania imposes significant restrictions on land trust transfers. In this state, using a land trust may not protect you from transfer taxes or reassessment.
  
• Florida offers unique legal protections for land trusts, making it a favorable jurisdiction for using this structure—but also requiring specific legal knowledge to set up the trust correctly.

Because state laws and tax regulations vary, it is critical to work with experienced professionals to tailor this approach to your specific situation and location. Anderson Advisors has experience across jurisdictions throughout the United States and can help structure your asset transfer. You can schedule a free 45-minute Strategy Session with one of our Senior Advisors here.

Final Tips for a Safe Transfer

1. Never rely on advice from forums like BiggerPockets that say to simply quitclaim the property.
   Online communities can be great for networking and sharing ideas, but they are not a substitute for expert legal advice. One of the most common and dangerous pieces of misinformation circulating in forums like BiggerPockets is that you can simply use a quitclaim deed to move your rental property into an LLC. As discussed, a quitclaim deed offers no warranty of title and can expose you to serious risks such as clouding your title and undermining your asset protection strategy. Relying on this shortcut could end up costing you far more than taking the proper steps from the start.
   
2. Go through this full analysis first—mortgage terms, title method, transfer taxes, and property tax caps.
   Before transferring any property, conducting a thorough analysis of your situation is critical. You must first review the terms of your mortgage to ensure that the transfer will not trigger a due-on-sale clause or lead to refinancing at a higher interest rate. Additionally, you need to confirm that you are using the correct type of deed—typically a warranty deed, not a quitclaim deed. Don’t overlook potential transfer taxes or the possibility that the move could cause a reassessment of your property tax value, especially in states with tax caps. A step-by-step review of these factors is key to avoiding unexpected penalties and ensuring your transfer is legally sound.
   
3. Set up proper structures (land trust + LLC) if needed to avoid costly mistakes.
   If your analysis reveals risks—such as a non-Freddie Mac/Fannie Mae mortgage or potential transfer taxes—you may need to implement an alternative business structure. In many cases, the safest approach is to first transfer the property into a land trust, which helps preserve your anonymity and avoid triggering a due-on-sale clause or certain tax consequences. The LLC can then be made the beneficiary of the land trust, providing both asset protection and tax advantages. Proper structuring not only minimizes risk but also strengthens your long-term real estate asset protection plan.