What To Do With This Money...gains, Etc
Quick question for you all.
I have a property that I purchase in January 2006 that I rehabbed and was going to lease-option/land contract to someone and sell at a later date. That was until some lady came along and wants to purchase the property outright. With this in mind, I had bought the property in my own name with the intentions of quit claiming the property to my LLC after I refinanced it after repairs and a tenant was in it.
I bought it for $145,000 and it will probably sell for $180,000 and of course I really need to use some of that profit for wedding expenses coming up, but I would like to use some of it for other deals.
So the questions are, what is the best solution for me to keep the most profit I can without being taxed heavily...do I need to quit claim it into the LLC before I sell it? Can I use some money for wedding expenses and then 1031 the rest for other properties? Just looking for best option before the deal is sealed.
Best,
[addsig]
You have no tax avoidance solutions. Your sale profit is taxed as ordinary self-employment income. This property is not eligible to participate in a 1031 exchange.
An LLC is generally tax neutral. That is, your tax liability is the same with or without the LLC.
The good news is that if you sell the property now, you have use of the money for the rest of the year minus whatever amounts you send in with your quarterly estimated tax payments.