Getting inherited properties out of an LLC while minimizing taxes

[Sam Elder]

My sister and I inherited free and clear rental properties that are held in an LLC. We are starting down the path of distributing the properties, and we are concerned about the tax consequences of dividing up the properties. Specifically, how best can we minimize or alleviate capital gains on the properties as they exit the entity?

Keeping the entity intact and co-owning the entity is not an option.  We do not see eye-to-eye.

We can pay taxes now and then depreciate the properties (again), but we are hoping to find a better option.

TIA,

Sam

[Steven Hamilton II]

Originally posted by @Sam Elder:

My sister and I inherited free and clear rental properties that are held in an LLC. We are starting down the path of distributing the properties, and we are concerned about the tax consequences of dividing up the properties. Specifically, how best can we minimize or alleviate capital gains on the properties as they exit the entity?

Keeping the entity intact and co-owning the entity is not an option.  We do not see eye-to-eye.

We can pay taxes now and then depreciate the properties (again), but we are hoping to find a better option.

TIA,

Sam

 Is the property the only asset?
Your BASIS in the LLC is the FMV of your share. That means if it was the same day you could pull it right out with no consequence.
Either way there is a step up in basis on your ownership of the entity.
Therefore if property is the only asset and it's FMV was 200k at date of death you can pull up to 100k (Your share) in cash or property out of the entity with no tax consequence unless there has been an increase in value.

Feel free to PM me if you want specific answers.