Transferring Members of an LLC - Tax Consquences

Commercial Real Estate Investing
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Transferring Members of an LLC - Tax Consquences

Salvatore Trapani
Realtor · Bayside, NY · Member since 2014 · 19 posts · 9 votes

I'm currently managing a commercial (15-unit residential) building in the Bronx, NY that is held under an LLC by a 100% sole-member.

The member is looking to fully transfer the corp. stake to a family member, making that person 100% sole-member.

Ownership of the building remains the same (as the LLC), but it's members are changing.

Is there a tax consequence involved? Is this still considered a sale with required transfer taxes?

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  • Ryan Seib
    Attorney and Real Estate Broker · Madison, WI · Member since 2016 · 265 posts · 100 votes
    6y

    Whether there are transfer taxes related to the real estate is a state law matter to discuss with NY licensed attorney. Likely no since LLC is selling so title does not change.

    Capital gains and the standard acquisition taxes will apply. To discuss all of them is a long conversation and which ones apply and how much depends a lot on the details not only of the property but of the seller's personal financials and the general terms of the negotiation as it shakes out. 

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  • Basit SiddiqiBusiness Member
    Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
    6y

    @Salvatore Trapani

    There is tax consequences.
    It seems as if there was either one of the two things happening
    1) Sale of LLC membership Interests from one party to another. Possible income tax implications
    or
    2) Transfer/Gift of LLC membership interests from one party to another. Possible gift tax/estate tax implications

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