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Tax, SDIRAs & Cost Segregation

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Shu Zhu
  • Real Estate Investor and Lender
  • Katy, TX
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32
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Selling previous primary residence to my LLC?

Shu Zhu
  • Real Estate Investor and Lender
  • Katy, TX
Posted Oct 4 2017, 21:07

My previous primary residence, now a rental, narrowly escaped flooding during Harvey, so I am thinking of selling it. I will need to sell it by the end of November to enjoy tax-free profit from the sale. Given there is a tenant, and there might not be enough time to sell the house, I am wondering if I could sell the property first to my LLC at current market price, and use the LLC to sell the house on the MLS next year, so as to take advantage of the tax free appreciation of the primary residence. I am not sure if this strategy is legally sound, as I do see potential for abuse. For instance, if I sell the house to my LLC at above market price, then use the LLC to sell it at market price, I will create artificial loss to lower my tax. Is there already a law that bars this kind of maneuver? Or, shall I just transfer the house to my LLC, and use current market value as the basis for calculating profit when the LLC sells the property?

Thanks in advance for your insights. 

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