Seller financed mortgage

4 Replies

My wife and I bought and sold commercial property. I forgot to transfer the title to our LLC prior to the closing of our seller financed mortgage. All monies received have been collected by the LLC and an assignment of the mortgage with buyer has been prepared by us to the LLC but not yet recorded. We have no lien against the property. We are 50/50 owners of the property and the LLC.

My question is whether or not we have any tax issues with reporting the entire sale under the LLC? No cash ever changed hands it is simply an assignment of the entire note.

Thanks in advance for your time and answers. 

Since an LLC is a pass thru entity as far as the IRS is concerned, I would say no, there are no tax implications.

thank you Gene. That's how I am planning to treat it too. 

@Shane L.

 If you are talking about short term capital gains or self employment tax or anything related to flipping a property you really need to consult a CPA. Without knowing a LOT more info your question can't be properly answered. 

@rob 

I already know how to account for the gain and the sale itself. It's simply the transfer into the LLC that concerns me. In some cases the transfer can trigger the full STCG recognition in the same year. I don't see how this could be the case since we're the owners equally either way. I consulted with a few different CPA'S and I used to work in a firm myself. I was just looking for other opinions too.

Thanks for your response and sound advice. It is appreciated. 

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