selling a single family home inside an LLC but claiming capital gains.

Forum|Forum|3 years ago
April 1, 2023
1 reply
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My single member LLC purchased a single family residence in 2021 with the intention of doing a large remodel and then renting the house out. I ended up not renting the house and instead selling it after the LLC owned the property for a year. I had around $100K in profit on the property and would prefer to treat this as a capital gain, not as business income. Is that possible, or since it was owned by the LLC do I need to report the gain inside the LLC. Any help would be appreciated and pointing me toward a IRS document would be extremely helpful.

Not A Product Question

JamesG1

Is the single member LLC being reported on a Federal 1040 tax return, an 1120-S US Income Tax Return for an S Corporation or something else? Please clarify.

The sale may be reported on IRS form 4797 Sales of Business Property.

The gain reported on a Federal 1040 tax return would be reported on Schedule D Capital Gains and Losses.

The gain reported on an 1120-S K-1 would be reported on one or more of the capital gain lines (7, 8 or 9) depending upon many variables.

The gain on sale of the property may be eligible for long-term capital gain treatment. To calculate your gain, subtract the adjusted basis of your property at the time of sale from the sales price your rental property sold for, including sales expenses such as legal fees and sales commissions paid.

@yesman182

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