Property from Corp to LLC - Posted by Phil (CO)

Posted by Phil (CO) on February 06, 2002 at 10:22:05:


Thanks for the info. It’s not an issue for me now, I was just trying to think through all of the “what ifs”. Sounds like I would definitely want to consult my accountant and/or attorney if I get in that situation.


Property from Corp to LLC - Posted by Phil (CO)

Posted by Phil (CO) on February 05, 2002 at 20:30:51:

I am just getting started in REI and incorporated my business since I am not planning on keeping any properties as rentals in the beginning. Planning on flipping and L/O as exit strategies.

But suppose the corporation ends up buying a property, and after a couple of unsuccessful L/O cycles I decide to keep it as a rental for the long run.

How would I transfer ownership to my LLC (to avoid double taxation on the rental income), and what would the tax consequences be?

Can the deed simply be signed over to the LLC? If so, how is that handled on the corporation’s books in terms of the asset, liability, and accumulated depreciation?

Re: Property from Corp to LLC - Posted by JHyre in Ohio

Posted by JHyre in Ohio on February 06, 2002 at 06:30:13:

The deed could be signed over to the LLC, with the LLC taking any debts subject to…this would effectively constitute a dividend from the corporation and would probably be subject to tax, depending on the respective basis and FMV of the property, as well as the corporation’s income history.

The corp may wish to sell the home to the LLC on a note…this avoids some of the double taxation issues, though the corporation is still subject to tax on any gain generated. To avoid gain, sell at a price equal to the properties basis…this could attract scutiny down the road, so if you can prove that the basis equalled or was at least close to FMV of the houese, gather that documentation. Make sure that the interest on the notes + any other rental or interest income does not equal 60%+ of the corporation’s income…that situation would cause some ugly tax consequences.

John Hyre