Transferring Property to an LLC in Florida

Transferring real estate to an LLC separates the property from the owner’s personal assets and creates a liability shield between the property and the owner’s other investments. For Florida property owners, particularly those who hold rental or investment properties, the transfer can provide meaningful asset protection, privacy, and estate planning benefits. But the process involves legal, tax, and insurance consequences that must be addressed before the deed is recorded. The LLC asset protection guide explains the broader framework for how LLCs protect assets in Florida.

The core benefit is straightforward. When real estate is titled in the owner’s individual name, a liability arising from the property (a tenant injury, a contractor dispute, an environmental claim) exposes all of the owner’s personal assets. When the same property is titled in an LLC, the liability belongs to the LLC, and the owner’s personal assets are insulated. This inside liability protection applies regardless of whether the LLC has one member or multiple members.

The LLC also provides outside liability protection for the property itself. If the owner faces a personal judgment unrelated to the property, the creditor’s ability to reach the LLC’s assets depends on whether the LLC is structured as a multi-member entity with charging order protection. In a properly structured multi-member LLC, the creditor cannot seize the property and is limited to a lien on the owner’s distributions.

Deed Type and Recording

The transfer is accomplished by executing and recording a new deed that conveys the property from the individual owner to the LLC. Florida requires that deeds be signed by the grantor, witnessed by two persons, and notarized. The deed must include a legal description of the property, the grantor’s name (as it appears on the current deed), and the full legal name of the LLC as grantee.

Property owners generally choose between a quitclaim deed and a warranty deed. A quitclaim deed transfers whatever interest the grantor holds without making any guarantees about the title’s quality. Because the owner is transferring to their own LLC, the lack of title warranties is usually not a concern. A warranty deed, by contrast, includes covenants that the title is clear of liens and encumbrances. Some owners prefer the warranty deed for the additional record of clear title, particularly if the LLC will later seek financing or if additional members will join the LLC.

Once executed, the deed is filed with the Clerk of Court in the county where the property is located. The recording makes the transfer part of the public record and establishes the LLC’s ownership for purposes of title searches and future transactions.

Documentary Stamp Tax

Florida imposes a documentary stamp tax on transfers of real property. The tax rate is $0.70 per $100 of consideration in all counties except Miami-Dade, which imposes $0.60 per $100 plus a $0.45 surtax per $100 for properties other than single-family dwellings.

When property is transferred to the owner’s own LLC without payment, the consideration is generally zero if the property is unencumbered. No documentary stamp tax is owed on a transfer with zero consideration.

If the property has an outstanding mortgage, the mortgage balance is treated as consideration for documentary stamp tax purposes even though no money changes hands. A property with a $300,000 mortgage balance will incur approximately $2,100 in documentary stamp taxes ($0.70 × 3,000) when transferred to the owner’s LLC. This cost is frequently overlooked and can be substantial for highly leveraged properties.

Homestead Property: Do Not Transfer

Florida’s homestead protections are among the strongest in the country. The Florida Constitution provides that a homestead is exempt from forced sale by creditors (with narrow exceptions for mortgages, property taxes, and mechanics’ liens), and the Save Our Homes amendment caps annual increases in assessed value at 3% or the CPI, whichever is lower. These protections apply only to “natural persons.” An LLC is not a natural person.

Transferring a primary residence to an LLC eliminates both the creditor exemption and the assessment cap. The property will be reassessed at its current fair market value, which for long-held properties can result in a significant increase in annual property taxes. And the property will no longer be exempt from creditor claims, which defeats the purpose of asset protection planning.

There is no asset protection reason to transfer homestead property to an LLC. The constitutional exemption already provides stronger protection than an LLC could offer. Homestead property should remain in the owner’s individual name (or, for married couples, as tenants by the entirety).

Property Tax Reassessment

For non-homestead property, Florida’s 10% assessment limitation caps annual increases in assessed value at 10%. A transfer to an LLC constitutes a “change of ownership” that resets the assessed value to current fair market value.

Florida’s Third District Court of Appeal confirmed this in a 2023 decision involving a married couple who transferred non-homestead property to their wholly owned LLC by quitclaim deed. The couple argued that no real change of ownership occurred because they retained equitable control through the LLC. The court disagreed, holding that the transfer of legal title to a separate legal entity was a change of ownership that triggered reassessment.

For investment properties held for many years with significant appreciation, the reassessment can increase annual property taxes substantially. This cost must be weighed against the liability protection and other benefits the LLC provides. In some cases, the tax increase may make the transfer uneconomical for lower-risk properties.

Due-on-Sale Clauses and Mortgage Considerations

Most residential and commercial mortgage agreements contain a due-on-sale clause that gives the lender the right to accelerate the loan (demand full repayment) if the borrower transfers the property without the lender’s consent.

The federal Garn-St. Germain Depository Institutions Act provides an exception for certain transfers that do not trigger the due-on-sale clause, including transfers to a trust in which the borrower remains a beneficiary. However, the Act does not explicitly exempt transfers to an LLC, and lenders are not required to waive their acceleration rights for LLC transfers.

In practice, lenders rarely exercise the due-on-sale clause when the borrower transfers property to their own LLC and continues making mortgage payments. The lender’s security interest in the property is not affected by the change in title, and acceleration would be counterproductive if the loan is performing. That said, “rarely” is not “never.” Borrowers should review the mortgage documents and, ideally, notify the lender before the transfer. Some lenders will provide written consent or require the borrower to sign a personal guarantee.

The mortgage itself is not transferred when the deed is recorded. The individual borrower remains personally liable for the mortgage debt even after the property is titled in the LLC. If the borrower wants the LLC to assume the mortgage, that requires a separate agreement with the lender, which most lenders will not approve for existing loans.

Insurance

Transferring property to an LLC creates an immediate gap in insurance coverage unless the policy is updated. A personal homeowner’s or landlord policy issued in the individual’s name will not cover claims against the LLC. If a loss occurs before the policy is updated, the insurer may deny the claim based on the ownership change.

Before or immediately after the transfer, the owner should contact the insurance carrier and either add the LLC as a named insured or obtain a new policy in the LLC’s name. Some insurers charge higher premiums for LLC-owned properties, particularly if the LLC holds multiple properties. Commercial insurance policies may be required depending on the property type and use.

Operating Agreement and Ownership Structure

The LLC’s operating agreement should be in place before the property is transferred. The operating agreement establishes the ownership structure, management authority, and distribution rules that determine how the property is governed within the LLC.

For asset protection purposes, a multi-member LLC provides significantly stronger protection than a single-member entity. Married couples frequently hold the LLC interest as tenants by the entirety, which provides an additional layer of protection against the individual creditors of either spouse. Unmarried owners should consider adding a second member (such as an irrevocable trust for family members) to secure charging order exclusivity.

If the owner holds multiple properties, each property can be placed in a separate LLC to isolate the liabilities of each property from the others. A slip-and-fall claim at one rental property would be limited to the assets of that property’s LLC and could not reach the owner’s other properties held in separate entities.

Transfer Process

The transfer follows a sequence of steps that should be completed in order.

First, the LLC must be formed and its operating agreement executed. The LLC should have its own bank account and EIN (if it will be treated as a partnership or if it elects corporate taxation).

Second, the owner reviews the mortgage documents for due-on-sale provisions and contacts the lender if necessary.

Third, the deed is prepared, executed, witnessed, and notarized. The grantor signs in their individual capacity, and the grantee is identified as the LLC by its full legal name.

Fourth, the deed is recorded with the county Clerk of Court, and any applicable documentary stamp taxes are paid at the time of recording.

Fifth, insurance policies are updated to reflect the LLC as the named insured.

Sixth, if the property is leased, existing lease agreements should be assigned to the LLC or amended to reflect the new landlord entity. Tenants should be notified of the ownership change and directed to make rent payments to the LLC.

Finally, the LLC’s records should document the property as an asset of the entity. The operating agreement should reflect the property if it is the LLC’s principal asset, and all property-related income and expenses should flow through the LLC’s bank account rather than the owner’s personal accounts.