Sell your Primary turned rental to your LLC

[Sathish Subramanian]

Hi,

Most likely this question could have came in the past, just could not find a straight answer. Hoping some of the experts here could answer or point me to right thread if answered already.  

Okay the situation is I moved out 2 years ago to a SFH home ( space reasons within state) and rented out the old place ( town home). Per 5 year rule, the old place will still qualify as primary residence and get the tax exemption if I sell within the next 10 months or so.

If I continue to rent then the property it will lose its primary resident status (roughy a year left). and will have tax bill when it comes to sell

What are my choices if anyone encountered similiar situation before.

I would prefer to keep the property, if it does not have big tax consequences later down the road.

Things I have a considered are :

(option A)Sell it and buy a similar property about the same value and start fresh ( equity and depreciation will reset , I am happy with the taxes on the new equity if I sell that new property, will get better depreciation benefits, the  downside is finding property in this crazy market and the Huge cost /expenses with buying and selling process which could offset what you are trying to save)

(option B)Do nothing and let the 2/5 year time period lapse and use 1031 when it comes time to sell. The down side is losing the primary residence benefits and not able to claim higher depreciation. Also I am hearing 1031 is not straight forward and comes with its own process and if done in correctly could be mess.

(option C) Create your Llc /S corp and sell the home to s corp so it is technically sold and everything resets and it is not on the owners name anymore (at least directly). article below. Downside is still trying to figure out if this possible and how to fund your new corp.but I like the concept. 

https://bradfordtaxinstitute.c...

anyways members and experts which option would you recommend?