The Tax Effects of Quit Claiming a deed from our LLC to ourselves
Hello everyone,
I'm a longtime lurker of BP and have never needed to post till now.
I think I might have screwed up my wife's and I's taxes for one of our rental properties.
We bought it in Phoenix, Arizona in 2014 and earlier this year we took advantage of raising property value prices and cash out refi'ed our rental property.
In order to do so we quit claimed the property from our LLC to our personal names.
We will keep it in our personal names for the foreseeable future.
We are the only members of the LLC.
However, I didn't think about taxes and so now I am nervous regarding the following topics:
1. Does quitclaiming cause an increase in property tax basis? We bought the property for about 150k in 2016 and now it is worth 600k according to the bank (cash out refi cost basis value). The property taxes are capped at a certain amount increase per year, so our property taxes are very low.
Will the quit claim deed accelerate our property taxes to the current assessed value because the owners have changed (Our LLC to Us) bypassing the annual property tax cap and causing us a big increase in annual property taxes because of a new assessed value?
2. Do we have to pay taxes on the property coming from the LLC to our personal names? Since it is "worth" a lot more now do we have to pay income tax, etc?
Thank you so much, I am a huge fan of BP and all you all have helped us so much.