Single Owner Deeding Property to Two-Member LLC - Tax Implications?

Question

Hi all! Quick question again. Tried searching on this specific topic and couldn't find anything.

If a single individual person deeds an income property they just acquired to a two-member LLC which they are a member of, (let's say two examples: an LLC with 50/50 ownership % between the two members, and another with an 80/20 ownership %), what are the tax implications of the sale/transfer for the individual selling and the LLC?

Let's assume the value of the property hasn't changed and is either quit claim or warranty deeded right after the first recording. I read this can either happen as a sale to the LLC, or as a capital contribution to the LLC by the single individual. Which is a better way and why?

Thanks so much in advance.

Dave Toelkes · Answer

I suspect the LLC is not giving you any cash for the deed to your property. If this is the case, then you are not selling. Instead, you are making a capital contribution at your basis. No tax implications for contribution of capital to the LLC.

Consult your own CPA for specific details as they may relate to your situation.

Ade Adesuyi · Answer

But what if you have a property in an LLC, and you quitclaim deeded the property into your personal name, then what would the tax implications be?

Single Owner Deeding Property to Two-Member LLC - Tax Implications?

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