Sell My first investment property

Member since 2019 · 8 posts · 1 vote

Hello,

Below is my situation and wanted to get this community's thoughts on what would be the best approach.

Current Situation

I just bought a townhome on my name at a good discount, thinking about putting it under my LLC. I am having a challenge getting a good rent so thinking about selling it with the intent to get another property suited for rental.

Taxes

If i were to sell it under my LLC, do i have to pay short term gains if i sell it for a profit? Can I acquire another property from the proceeds of the townhome? Can I do 1031 exchange?

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Dave FosterBusiness Member
Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
4y
@Mohammad Ali whether the LLC is owned by you or an entity there will be a tax bill if you sell and do not do a 1031 exchange. If you contribute the property into a simple single member LLC that elects to be taxed as a sole proprietor then the LLC is a disregarded entity as the property will still be reported on your personal tax return where it is reported now.
Any entity can do a 1031 exchange. The only real reason to keep it in your name and do the 1031 is that it gives you more flexibility for borrowing.
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