Quote:
Originally Posted by rusnak
I think the issue is transfer tax. If she's basically selling it to herself, then she can be double taxed, and if she partners with you, then she pays double capital gains unless she sells at a loss. She can just deed it to the LLC perhaps. The idea is to defer taxes. To the extent that the LLC has substantial assets, not sure if you are really insulating yourself from potential loss at all unless you form a single asset entity.
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I'm still doing research, but the tax implications are one reason we are thinking of this. We're still researching it, but she lived in the house 2 of the last 5 years, so she should be able to sell it without paying tax on any profit. If the house is worth $300k after the $35k rehab, and the LLC pays her $260k for it she should be able to pocket the difference between what she has in it and the $260k tax free. The LLC should make enough profit to make the transactions legitimate and pay minimal tax. In theory, anyway.