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Posted by Tax Tip on July 2, 2008, 11:08 am
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Selling property to your own S-Corporation can be beneficial in TWO
specific situations.
1.) You do not meet the requirements for excluding capital gains on
the sale of your primary home
2.) You can not take advantage of depreciation on appreciated property
Selling to your S-Corp will allow you to take advantage of the 2-Year
Exclusion and the new basis.
For Example:
You lived in a property for 3 years, and rented it out for the next 7
years. Since you haven't lived there for 2 of the last 5 years, you
cannot sell the property as a primary residence and avoid the capital
gain. However, after moving out of the property, you sold it to your
own S-Corporation, which allowed you to exclude capital gain because
requirements for the primary residence two-year rule were met.
Also:
Say you purchased a home for $50k many years ago, and it is worth
$500k now. If you decided to just rent it out, the basis for
depreciation would be the original basis of $50k. But, after selling
it to your S-Corporation and then renting it out, you can depreciate
the new basis of $500k.
There's no catch and it's A-OK with the IRS. To learn more about how
to take control of your real estate investments, check out our
resources: TReXGlobal.com ( http://www.trexglobal.com ).
Community Relations TReXGlobal.com
( http://www.trexglobal.com )
Simple FREE to Use Web Tools for Real Estate Investors
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