1031 Property LLC and additional members

[Clay Miller]

Hello,

My question is two fold. From what I have been able to gather from your forum is: If I have a 1031 property in my name and have held the property for 1-2 years that I can transfer it to an LLC and that should not trigger a sale. The second part is what I need help on. So say I transfer that property to an LLC and six months later a couple of individuals want to become members of my LLC. Does that affect the 1031 property in any way? Thanks!

[Bill Exeter]

Hi @Clay Miller,

You can transfer the property into an single member and disregarded LLC at anytime. However, if you are going to add members so that it becomes a partnership for tax purposes you should wait long enough to demonstrate that you intended to acquire the property and hold for rental or investment purposes in your name of the single member and disregarded entity. It is all about demonstrating that you sold and intended to reinvest under your individual name/tax return.