Capital Gains tax on owner occupied rental property owned by LLC?
I'm part of a 3-person LLC that recently sold a rental property. We recently sold the property and I lived in one of the 3 units for >2 of the 5 years prior to the sale of the property.
When we filed out annual K-1s, I would get a lesser tax write-off than the other partners because I couldn't claim the 'loss' for the unit I lived in - you can't 'pay yourself' rent. In other words, I only benefitted from the tax break for 2 of the 3 units.
To what extent do I owe capital gains tax from the sale? I've gotten 3 conflicting answers and my accountant has no idea: a) I owe nothing because I lived in the building b) I only pay on 2/3 of my portion of the gains because I lived in the 3rd unit c) I can't claim the owner-occupied exception at all because the property was owned by an LLC.
If anyone has an answer, I'd be most appreciative!