Sell Secondary home to LLC to avoid 5 years Capital Gains Tax
Hello,
By end of 2018, I would have owned my Second home for 5 years and have stayed in it for 2 years as Primary Residence out of the last 5 years. I am looking to convert that into full time rental property and also I want to void paying the Capital Gains Tax (500K for Married filing jointly), I have considerable equity in the home, I don't want to sell the property to others now and want to hold it for few more years.
From the Article below by @Brandon Hall, I see that I can sell this SFH to an LLC I own. This property still has Mortgage Balance so I am aware of the Due-on-Sale clause may get triggered by the bank. I have also seen arguments against using QuitClaim Deed, instead some people advised to use Warranty Deed which preserves the Original Title insurance.
https://www.biggerpockets.com/renewsblog/2016/08/0...
Questions:
1) The article says we can sell to an S-corp, why can't it be an LLC (that has not elected S-corp status), any Tax consequences?
2) If I SELL it, then I may have to payoff the Mortgage Balance and also pay the Transfer Taxes. When the article refers to SELL, does it just mean using a Warranty DEED and transferring the ownership from personal name to the LLC name?
3) If the SFH Title is currently owned by both Spouses, can the LLC be a Single-Member LLC with the single member being the Holding LLC which has both spouses as partners?
This topic may have been discussed before, but I appreciate if I can get updated information after the new Tax Bill and also if this is still a viable strategy to avoid Capital Gain Tax?
Thanks,
Saran