Rental loss deduction when transferred to LLC

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  • jmc
    Senior Member
    • Jun 2005
    • 106
    #1

    Rental loss deduction when transferred to LLC

    Rental losses above $100,000 AGI can not reduce ordinary income with exception in the year of disposition as long as the sale is not made to a related party.
    If rental properties were transferred from an individual to an LLC with that individual being sole LLC member, then does this entity change regarded as a sale to a related party?
    Tags: None
    • Bees Knees
      Senior Member
      • May 2005
      • 5456
      #2
      A single member LLC is disregarded for federal tax purposes. Unless the LLC elects to be taxed as a corporation, a transfer from an individual owning rental property to his/her 100% owned LLC would be considered the same as if nothing happened for federal tax purposes.

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        • Roland Slugg
          Senior Member
          • Aug 2006
          • 1860
          #3
          Furthermore ....

          The transfer to a controlled entity isn't even a sale, so even if the SMLLC elects to be taxed as a corp, no sale has been made ... AND it's a related party anyway ... AND transferring real estate to a corp is almost always a bad idea.
          Roland Slugg
          "I do what I can."

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