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MFS sale of house in LLC

Level 1

I have a client who files MFS.  She has a house in an LLC.  Never rented.  Put money into it and is now selling it.  She wants to give have of the proceeds to her husband.  How can she do this without him claiming it as income.  She is aware of capital gains and will give him half after taxes are paid.  I don't think she can do a for 709.  She lives in LA which is a community property state.  She is sole owner of the LLC.  Not sure how to treat this.  HELP!!

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2 Comments 2
Level 15

Has it already been sold?  If not, the easiest method would be to add him to the LLC (or take it out of the LLC and retitle it to both of them).  So they both own it.

If it has already been sold, I'm not sure.   If it was in a non-community property state, there would be nothing to be done.  But I'm not familiar enough with Community Property rules to know how that affects things.


Level 15

@Andrea-Poirier wrote:

How can she do this without him claiming it as income. 


Sorry, I missed that part of your question and my previous answer is probably the opposite of what you are looking for. 

In that case, she would need to just sell it and gift him whatever she wants.  But again, I am unsure of how Community Property laws affect things.  But as a Single Member LLC, it would SEEM to be that it is 'separate' property and only she would be taxed.