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the llc is strictly pass through to you . anything done in an llc passes through to our own personal income tax.
however A potential problem with owning your principal residence through a limited liability company is that the limited liability company may cause you or your spouse to fail the ownership test for the exclusion ..
selling the home to yourself would have you paying all the taxes due up to this point anyway .
Then I'd talk to an accountant to see what sort of documentation would suffice. This seems like your best approach. Maybe you can document the work by getting any old building permits? Getting invoices from contractors? Showing before/after pictures of the work? At any rate, these are legit adders to your cost basis. The problem is documenting and getting the dollar amounts.
All of these other thoughts seem to me like "tricks" that are likely to raise flags. Even CPAs can disagree on things that are not black and white.
the llc is strictly pass through to you . anything done in an llc passes through to our own personal income tax.
however A potential problem with owning your principal residence through a limited liability company is that the limited liability company may cause you or your spouse to fail the ownership test for the exclusion ..
selling the home to yourself would have you paying all the taxes due up to this point anyway .
That is interesting. A single owner in a one man LLC gets the exclusion, but a couple would generally not.
But paying the taxes up until this point may not be too bad depending on what you sell the house for.
Still, I have never heard of someone doing this, even though it would be a great loophole for normalizing long term vs short term home owners.
About the old building permits, I think our county only keeps them on record for 6-7 years, and on a farm many years back there were not always permits to be required.
I'll confess to not being a good record keeper, but this is a reminder for all of us to keep our home improvement invoices.
Even pre-1997 there was not an unlimited tax break, especially in the case of downsizing. As I recall there was a one-time exclusion of $125K/$250K for age 55 and over, which I gather would not be enough in your situation? Maybe someone can correct me if my memory is wrong here.
How much did you pay for the property? How much is it worth? How much have you spent on improvements over the years?
I believe you should take your legitimate exclusion whether you have receipts or not. If the IRS ever audits you, produce what you have, show pictures of the improvements as documentation and hopefully that will be enough. What is the worst thing that could happen? They don't agree with your exclusion and make you pay the taxes that you would have already paid if you didn't take the exclusion that was rightfully yours.
That is interesting. A single owner in a one man LLC gets the exclusion, but a couple would generally not.
But paying the taxes up until this point may not be too bad depending on what you sell the house for.
Still, I have never heard of someone doing this, even though it would be a great loophole for normalizing long term vs short term home owners.
About the old building permits, I think our county only keeps them on record for 6-7 years, and on a farm many years back there were not always permits to be required.
it is very interesting about married vs single in an llc . but this is what usually happens . it is usually the things we think we know that ain't so that gets us in trouble .
That is interesting. A single owner in a one man LLC gets the exclusion, but a couple would generally not.
But paying the taxes up until this point may not be too bad depending on what you sell the house for.
Still, I have never heard of someone doing this, even though it would be a great loophole for normalizing long term vs short term home owners.
About the old building permits, I think our county only keeps them on record for 6-7 years, and on a farm many years back there were not always permits to be required.
So you would take out a mortgage in order to purchase the home, go to title, pay the escrow charges and recording fees, all of that?
(I accidentally deleted my long verbose message above.)
But to summarize, you don't need receipts to take the exclusion. I do have some receipts, but was my own general contractor for the most part and did a lot of DYI.
(I accidentally deleted my long verbose message above.)
But to summarize, you don't need receipts to take the exclusion. I do have some receipts, but was my own general contractor for the most part and did a lot of DYI.
To take the exclusion, no. But if you are audited, you will be asked how you arrived at your basis.
To avoid capital gains tax I think you have to give the property to a charity.
Could you get a mortgage that can be transferred to the charity when you give them the property? You get the cash from the motgage
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