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Question about property taxes and LLCs...
Posted on 5/14/23 at 12:47 pm
Posted on 5/14/23 at 12:47 pm
My siblings and I have an LLC our inheritance went into. When my mother passes, it's in her will that her house go to the LLC.
When my wife and I retire, we plan on retiring to my mother's home (it sits in the middle of a large swath of family property which is, most importantly, NOT in Baton Rouge).
I know there's at least some avoidance of tax penalty when using proceeds from one home sale to buy another home. The wife and I plan on selling our home not long after we retire (which is still many years from now) and moving to my mother's home (assuming she's passed by then). Can we take advantage of the tax break by using the proceeds from the sale of our home to "buy" the house from the LLC?
Or does having ownership in the LLC disallow such activity?
When my wife and I retire, we plan on retiring to my mother's home (it sits in the middle of a large swath of family property which is, most importantly, NOT in Baton Rouge).
I know there's at least some avoidance of tax penalty when using proceeds from one home sale to buy another home. The wife and I plan on selling our home not long after we retire (which is still many years from now) and moving to my mother's home (assuming she's passed by then). Can we take advantage of the tax break by using the proceeds from the sale of our home to "buy" the house from the LLC?
Or does having ownership in the LLC disallow such activity?
3
Posted on 5/14/23 at 12:59 pm to Bard
I doubt the LLC gets the exemption. You can see now how much the taxes are and decide how much trouble you want to go to.
If I am your siblings I want you to buy the house from the LLC to keep the inheritance value the same.
If I am your siblings I want you to buy the house from the LLC to keep the inheritance value the same.
Posted on 5/14/23 at 2:51 pm to Bard
quote:
I know there's at least some avoidance of tax penalty when using proceeds from one home sale to buy another home.
Can we take advantage of the tax break by using the proceeds from the sale of our home to "buy" the house from the LLC?
Unless I’m not understanding your question, whatever home you’re purchasing has nothing to do with the capital gains exclusion on your current home.
These are the conditions for the principal residence exclusion:
quote:
Ownership and Use Tests
To claim the exclusion, you must meet the ownership and use tests. This means that during the 5-year period ending on the date of the sale, you must have:
Owned the home for at least two years (the ownership test)
Lived in the home as your main home for at least two years (the use test)
Gain
If you have a gain from the sale of your main home, you may be able to exclude up to $250,000 of the gain from your income ($500,000 on a joint return in most cases).
Posted on 5/15/23 at 9:25 am to Jag_Warrior
quote:
Ownership and Use Tests
To claim the exclusion, you must meet the ownership and use tests. This means that during the 5-year period ending on the date of the sale, you must have:
Owned the home for at least two years (the ownership test)
Lived in the home as your main home for at least two years (the use test)
Gain
If you have a gain from the sale of your main home, you may be able to exclude up to $250,000 of the gain from your income ($500,000 on a joint return in most cases).
Thanks!
Posted on 5/15/23 at 11:53 am to Bard
quote:
Or does having ownership in the LLC disallow such activity?
Jag covered the income tax issues (there are none)
But in some states, having the property in an LLC can jeopardize the homestead exclusion for property taxes.
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