Transfer rental to partnership llc without gain or recapture

Forum|Forum|7 years ago
June 6, 2019
1 reply
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I have 3 rental houses, set up llc "partnership" (wife and I..50/50) 4/1/16 and transferred the propertys to the llc, new loan and did title work....how do i work the transfer in turbotax so there is no gain/recapture ect , ..i have filed the 1065 through turbos business program

TurboTax Home & Biz Windows

Rick19744

Employee

I recommend that you get some professional advice here but I have the following comments:

Contributions of property to a partnership in general is not a taxable event.
The partnership "steps into the shoes" of the contributing partners basis; including depreciation method, life, etc.There is no depreciation recapture here. The LLC steps into the shoes on this as well.
While technically Section 704(c) applies here, since you are a husband and wife filing a joint return I assume, this issue is really moot. This statute deals with contributing property where the FMV is different than the adjusted tax basis.
Where partners run into problems is when there is debt involved. Contributing debt becomes a set of deemed contributions and distributions. The other issue is that in order to avoid any gain in this situation, you need to make sure that you stay responsible for the debt. This is somewhat involved and really beyond the scope of this forum and suggest you consult with a tax professional that can provide assistance to avoid any gain.

*A reminder that posts in a forum such as this do not constitute tax advice.Also keep in mind the date of replies, as tax law changes.

L

lemonfbakerAuthor

Employee

I had professionals do all that. Lawyer set up llc. Bank transferred loan to llc property title changed to llc. I just need to know how to get turbotax to not show it as a sale so it doesn't trigger recapture etc.