S Corp Tax Question? (another One)
I brought a fixer upper house under a single memeber (me) s corp with intent to sale but have decided to actually live in it owner occupied with that being the case would it have negative tax implications for the s corp if I did that or would I be better off to deed it into my personal name and then refinance it ?
In my opinion:
You will yourself much better off with Lenders if you deed the property to your personal name, including the benefits of a home equity line at favorable rates if your credit scores qualify.
And if you live there for 2 years of the next 5, your profit upon sale is tax free up to $250K as a single person.
Otherwise I see no tax implications.
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The Section 121 capital gains exclusion is only avaiiable to individuals. Your S-corp does not qualify.
yes I understand if I live in it under an s corp that I am not entitled for the tax benefits of living there two years, what I am trying to figure out is if I deed it to my personal name and then refinance it owner occupied will I be subject to any dealer flip taxes by transfering the deed from my s corp to my own individual name in the process.... from what I read so far thats probably the best avenue?.
Who are the S Corp shareholders? Is it just you and your spouse? Who would be on title if you transferred the property to your name?
You could have a transfer tax issue on the transfer AND which could subject your house to reassessment as well with a transfer. You really should consider getting professionla advice on this transaction or doing a lot of legwork by calling your local TAX assessor AND county about any transfer tax implications.
You also need to know your basis in the S Corp and property so that if you distribute the property (to you), what impact that will have on you.
As a general rule, when you contribute property to your corporation, you make a contribution of capital at your cost basis. When you withdraw that property from the corp, you withdraw it at FMV. The difference is considered a taxable profit to the corporation just as if the corporation sold the property to you.
I have had several houses that I acquired through my LLC and then decided to keep in my personal name for rentals. (I use LLC for flips and my personal name for rentals). I deeded the house from my LLC to my personal name, got new insurance in my personal name, and I wrote a check to the LLC for all expenses incurred in acquiring the property.
Just curious, nickle why you hold the flips in the LLC and the rentals personally. Seems to me the other way around makes more sense since the liability risk is higher on the rentals.
Need to keep my flips and rentals seperate. Could use scorp, llc, but prefer my personal name for my rentals. In FL your homestead house is untouchable and your IRA is always untouchable. Other than my house and my IRA, I have no other assets - other than my rentals. Also, it is almost impossible to get hazard insurance on NOO here in FL is your property is not owned by an individual. Lastly, I do it for ease and simplicity.
An institutional TIC (tenant in common) is where you are part of a group of investors that purchases a property. Projects range from a shopping center, office building, large apartment community, marina or other very large multi million dollar acquisition.
There are many companies who sponsor these types of transactions & are usually bought through a broker that specializes in offering TIC 1031 opportunities.
Sanjosee,
Thanks for your input; that was very helpful.
ptq
Institutional TICs certainly reduce the risks and stress with the 45 day period.
Should you choose to let your 1031 exchange fail, have your tax advisor review your transaction to see if you can defer you taxable events into 2007. Section 1031 works in conjunction with Section 453 (installment sale code) such that if you did not have the right to obtain the cash in your 1031 exchange account until 2007 your taxable event is deferred into 2007.
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