We formed an LLC in 2022. In 2023, we bought a commercial building under the LLC. How do I account for this in the member questions. Did my husband and I contribute the down-payments as capital contributed, or does the value of the building (being mortgaged) count as property contributed?
You contributed the down payment as a capital contribution.
Then there is the recording of the mortgage - some items add to its basis some like escrow accounts are additional assets. Some items are an expense.
An oversimplified example
purchase price 500,000 including certain closing costs (the asset that may need an allocation between land and building) shown as assets
mortgage (400000) shown as a liabiltiy on balance sheet
real estate tax escrow 5000 shown as an other asset on balance sheet
interest charge til next monthly payment 500 shown as an expense
points 7500 shown as an amortizable asset - amortize over life of mortgage
cash to balance (11300) shown as capital contribution.
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