Quit Claiming To LLC
i just became a member of TCI and have a question I hope somebody on this forum will know the answer to. It concerns the tax implications of quit claiming to an LLC:
If you own a rental property personally and you quit claim to (single member) LLC, is this considered a sale by the IRS? If so, do normal capital gains taxes apply?
Your propably going to have to pay realty transfer tax :-o
I maybe wrong, but doesn't it depend on which state you are living in? In GA, when you file quit claim deed, you are not taxed for it.
Quote:If you own a rental property personally and you quit claim to (single member) LLC, is this considered a sale by the IRS? If so, do normal capital gains taxes apply?I would treat it as a tax free contribution at your adjusted basis.
No sale here.
Just my opinion. Consult a tax professional licensed in your state for specific details.
Ok, to make things more complicated how about after the transfer is complete and you sell the property. Who pays the tax, the corporation or the person that actually bought it???
In the case of the single member LLC, the business is a pass-through entity. So the taxpayer who is the owner-manager of the LLC will end up paying the taxes on his personal 1040.
It is not a taxable transfer. Some states charge a tansfer tax thus, I reccomend my clients use a land trust then assign the beneficial interest to the LLC.
Respectfully,
Clint Coons, Esq.
Talk to your county auditor's office or go online and get their conveyance fee exemption form. This is what you'd submit along to avoid the fee. It will usually have a laundry list of reasons for exempting the transfer from the conveyance fee. Check it out and let us know which one you think would work.
How about quit claiming between LLCs. My partners and I would like to diversify our LLC a little by putting some properties into a new LLC.
Can one simply QC the properties from one LLC to the other for $0 consideration with the new LLC taking on the first LLC's cost basis? Or is something more complicated recommended?
Erick,
I would consider tranfering each property to a separate entity and then dissolving the origional entity. Your existing entity, as a previous owner, still may have liability in terms of neglegence, enviromental, etc