How to record an owner contribution to a rental LLC

What counts as a contribution

A contribution is anything of value an owner puts into the LLC in exchange for their ownership interest: cash transferred from a personal account, a bill the owner paid personally on the LLC's behalf, or property such as a building or equipment. It is the opposite of a draw. See owner draws vs distributions for money going the other way.

The tax rule is the same direction. For a partnership, IRS Publication 541 says that neither the partner nor the partnership recognizes a gain or loss when a partner contributes property for a partnership interest, with exceptions for disguised sales and a few other cases, and that a partner's basis starts with the money plus the adjusted basis of property contributed. The page is IRS Publication 541, Partnerships. A single-member LLC is disregarded for income tax, so money you put in is simply your money moving between your pockets. The source for that is the IRS page on single member LLCs.

Recording cash you transfer in

You wire $18,000 from your personal savings into the LLC's checking account to cover a down payment gap and early repairs. The LLC's books record that on the day the money arrives.

Use an equity account named Member contributions (one per member if there are several). Never post it to rental income. If it lands in income, your Schedule E would show rent you did not collect, and you would pay tax on your own money.

Example a made-up LLC opens with a $0 balance. The owner contributes $18,000. Later the LLC pays a $4,000 repair from checking. Checking now reads $14,000. Member equity reads $18,000 less the $4,000 loss from the repair, which is $14,000. Cash and equity match, which is how you know the entry was right.

Recording a bill you paid personally

Often the contribution is not a transfer. You paid a plumber with your own card because the LLC account was short. Two things happened: the LLC incurred a real expense, and you gave it money to cover it. Record both, and the net effect on cash is zero.

The repair is still an expense and still deducted in the usual way if it is a repair and not an improvement. The contribution entry replaces the cash that would have left the LLC account. Keep the invoice and the card statement line together, because the receipt proves the expense. IRS Publication 583 lists receipts, paid bills and invoices as supporting documents that back up entries in your books and your return.

If you would rather get the money back, repay yourself from the LLC. That repayment is a draw, or a loan repayment if it was a loan, and not an expense. Decide which before the bill gets paid, because switching later makes the books confusing.

Contribution or loan?

Money you put in either buys more equity or is lent to the LLC. They look the same in the bank and different in the books.

• Contribution: no repayment expected on a schedule, you get paid through draws or distributions from profit, and it adds to your capital.
• Loan: written terms (amount, interest, due date), a liability on the LLC's balance sheet, and repayments that are not draws.

If you intend repayment, write the terms down before the transfer. Interest on a loan between you and the LLC can have tax effects on both sides, which is a question for your tax preparer and, for a multi-member LLC, a reason to read the operating agreement. When in doubt, treat it as a contribution and ask.

Contributing property instead of cash

You own a duplex personally and move it into a new LLC. Publication 541 says the partnership's basis in contributed property is the same as the partner's adjusted basis when it was contributed, increased by any gain the partner recognized. Your depreciation history carries over, so the LLC needs your old numbers: purchase price, land share, depreciation taken so far. Moving a mortgaged property can also trigger loan terms, covered in moving a rental into an LLC and due-on-sale.

Example a made-up owner contributes a duplex with an original cost of $300,000 ($60,000 land and $240,000 building) and $30,000 of depreciation already taken. The LLC records land $60,000, building $240,000 and accumulated depreciation $30,000, so the book value is $270,000. Member contributions is credited $270,000 if there is no loan. If a $150,000 mortgage goes with it, the LLC records the loan as a liability and credits contributions $120,000 ($270,000 less $150,000). The balance sheet still balances.

Get this one done with your preparer. The rules on a loan assumed by the LLC, on a disguised sale and on basis are not worth guessing at.

A quick checklist

1. Put the money in the LLC's own bank account, from your own account. Do not deposit it into another LLC's account.
2. Record it in the same month, as Member contributions.
3. Note the date, amount and source in the memo.
4. Never post it as income, and never use it to hide a missing deposit.
5. At year end, send the totals of contributions and draws to your CPA together. What to send your CPA at tax time lists the rest.

How DoorKeeping handles it

DoorKeeping gives each property its own LLC books, and money moving between the owner and the LLC is recorded as an explicit, logged contribution or draw. It never moves between two LLCs' books any other way. Contributions sit in equity, apart from rent and from the expense accounts that map to Schedule E lines, so putting money in does not change reported profit. DoorKeeping gives no tax advice, so check loans and property contributions with your tax preparer.

Sources

1. IRS, Publication 541, Partnerships, read Oct 30, 2026
2. IRS, Single member limited liability companies, read Oct 30, 2026
3. IRS, Publication 583, Starting a Business and Keeping Records, read Oct 30, 2026

Questions

Is money I put into my rental LLC taxable income to the LLC?

No. A contribution is equity. Publication 541 says a partnership does not recognize gain or loss when a partner contributes property for an interest, and a single-member LLC is disregarded for income tax.

What if I pay an LLC bill with my personal card?

Record the expense in the LLC's books and a matching owner contribution, so cash is unchanged. Keep the invoice and card statement as support.

How do I get my contribution back?

Through a draw or distribution from the LLC, or as a loan repayment if you set it up as a written loan. Neither is an expense.