Q: Can my LLC sell rental property, dissolve, and a new LLC use the money to buy rental without taxes?
I will use made up numbers to keep it easy.
I have a multi-member LLC in Florida and we're moving to another state that does not allow domestication. The LLC bought a rental property for $300k using $50k the members loaned the LLC and $250k a friend loaned the LLC. As far as Florida is concerned, there's no "mortgage" on the property, the LLC just has the personal loan. The current balance of the personal loan is $175k. I'm getting ready to sell the property for $400k and dissolve the LLC. I want to take the money and pay off the balance of the loan to the LLC and then in our new state, find some new rental property to purchase, maybe in a new LLC in that state.
The LLC owned the property for 5 years and 3 months. Is the best I can do is have a capital gains tax on the $100k difference? Or is there some way I can take all the money to a new LLC in a new state and invest in rental property without any taxes?
A:
The taxes are capital gains and charged on the sale. Difference in purchase value and sale value. Yes you can increase your basis based upon loans ect that are paid back. In my opinion you will owe capital gains and no way around that.
Lastly, you are asking sophisticated tax planning advice via a free legal advice website, why? On something this serious don't you think you need to get very detailed and specific advice since ultimately if you don't pay the taxes the IRS will likely knock on your door in the future. I think that you really need to seek out a tax lawyer and give him or her the full details and get specific advice.
Good luck,
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