Property transfer to LLC - Tax implications for depreciation
In the following example:
1) I bought a rental property in 2011 for $100,000 which has been fully rented since.
2) I transfered the property from myself to a single-member (myself) LLC in June 2017. The "sale" price was $1. The property was appraised at $150,000 at the time of LLC formation.
Determining depreciation before LLC formation was straight forward. How is this done for the LLC? Do I use the orriginal sale price that I, as an individual, bought it for? Sould depreciation for the property in the LLC start whan the property was transfered to the LLC?
Most Popular Reply
You should consult your Tax Advisor but the transfer to the LLC should be disregarded for tax purposes since the transfer is to a disregarded entity (essentially a transfer to yourself). You would continue to depreciate the property as you did when you purchased it in 2011.