Cap Gains on Re-entering ownership

[David G West]

Hi,

We bought a property last year thru an LLC and the previous owner was there for 2 years so he sold it with no capital gains.
For various reasons, we are partnering with the previous owner again and adding him as a partial-owner of the LLC and therefore the property. 
How would that affect his tax situation if at all?

[Chris Seveney]

Quote from @David G West:

Hi,

We bought a property last year thru an LLC and the previous owner was there for 2 years so he sold it with no capital gains.
For various reasons, we are partnering with the previous owner again and adding him as a partial-owner of the LLC and therefore the property. 
How would that affect his tax situation if at all?

 Not a CPA, but I would never give anyone tax advice. Even if someone on BP told you "this is what I think", I would not tell him that, I would advise him he needs to talk to his accountant. 

Now I do want to throw what my guess is out there, which is since he sold the property last year he is now buying into the LLC which owns the property, he cannot take his old basis or use this type of exemption. I also do not believe an LLC can use the 2 year capital gain clause as it would not be considered owner occupied.