Hello,

My partner and I currently run 2 separate LLC's. We have a home under one of the LLC's that was previously used for employee housing, but we're converting it to a residential rental. In order to separate the accounting and more importantly limit any liability we'd like to transfer it to the other unused LLC. What type of tax implications could this raise, being as the property is nearly fully depreciated? Is there any method to potentially minimize the taxes, if applicable? Thanks in advance.

My partner and I currently run 2 separate LLC's. We have a home under one of the LLC's that was previously used for employee housing, but we're converting it to a residential rental. In order to separate the accounting and more importantly limit any liability we'd like to transfer it to the other unused LLC. What type of tax implications could this raise, being as the property is nearly fully depreciated? ========>>UNLESS you dispose of th epty, you do no t need to recapture the unrecaptured sec 1250 depreciation taxed as regular income at the tax rate of 25%;as you can see, A section 1250 gain is recaptured upon the sale of depreciated real estate; this includes all real property that is subject to an allowance for depreciation and that is not and never has been section 1245 property.



Is there any method to potentially minimize the taxes, if applicable====>> as mentioend above; unless you dispose of the rental pty , you do not need to recapture sec 1250 depreciation taxed as regular income. since when you sell an asset and especially, when you own a depreciable real estate asset, like a rental house, you can also be subject to tax on any sales proceeds greater than your depreciated value. This "unrecaptured 1250 gain" is taxed at a 25%rate.

Let me verify that I understand correctly.

If I transfer the property from LLC (A) to LLC (B) the adjusted basis transfers to (B) and no gain/depreciation recapture is recognized until such time as we sell/dispose of the property?

Let me verify that I understand correctly.

If we transfer the home from LLC (A) to LLC (B) the adjusted basis will transfer over to (B) and no gain will result until we sell/dispose of the property?