There are a few things to keep in mind when using an LLC to avoid capital gains taxes on the sale of your personal residence. When you sell your primary residence to an LLC that you intend to use as a rental property, note that your property may be reassessed for property tax purposes, which may negate the capital gains tax savings.
What is the maximum capital gain rate for an LLC?
The maximum long-term capital gain rate on the sale of LLC interests by individuals is generally 20 percent, just as it is on corporate stock. However, if the LLC holds depreciable real property, then a 25 percent maximum rate may apply to at least some of the gain.
How much is capital gains tax on a sale of a business?
The current long-term capital gains tax rates are 0%, 15% and 20%, depending on income. When applying capital gains tax rules to the sale of a business, the IRS typically looks at the individual assets of the business. That’s assuming that your business is structured as a sole proprietorship, partnership or limited liability company (LLC).
