Article Date:
May 2016

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Sell Home to S Corporation and Then Make It Rental Property

Are you upgrading to a new home? Would your previous home make a great rental property?


If so, don’t simply convert it to a rental property. Why? Two big reasons:



You would miss out on the $250,000 ($500,000 if married) home-sale profit exclusion.


You would have a lower depreciation basis and thus fewer tax deductions with a conversion.


If your home has appreciated in value since you bought it, you can get both some tax-free income using the $250,000/$500,000 exclusion and a step-up in your depreciation basis by selling your home to your S corporation. (This is the new S corporation you will create when you finish reading this article.)


The sale of your home to your S corporation triggers the related-party rules that turn capital gains into ordinary income. On the surface, that’s a problem. But when you know the rules that you will learn in this article, you’ll see how you can avoid this problem.


Actually, there are several things you have to consider. This article guides you through those so you can get the tax and financial results that you want. ... Log in to view full article.

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