Looking for new ways to save money on your tax bill? Consider this…
If you’re thinking of converting your primary residence into a rental property, you could be stuck with your old cost basis and have to pay a lot of tax. However, if you sell your home to your S corporation, you’ll have a new, stepped-up basis for depreciation when you rent to a third party through your corporation.
Is there a catch? Well, we’re dealing with the IRS so of course there’s a catch! But don’t worry. We’ll explain how to make everything legal when you read my new, free article titled Tax Tips: Sell Home to S Corporation and Then Make It Rental Property.
Three ways our fact-filled article can help you:
- We’ll tell you key facts to keep in mind. For starters, the S corporation is a separate legal entity, but also a related party. That means you need to consider the related-party rules. They state that you must treat any gain on the sale of depreciated property to your S corporation as ordinary income, not as a capital gain. Get all the facts when you read the full article.
- We’ll tell you the good news if you do have depreciation that turns into ordinary income. If you have depreciation that turns into ordinary income, you still may not have a problem. Why? Because you can shelter $250,000 ($500,000 if married and filing jointly) of taxes from the sale of your home. The IRS doesn’t care if the gain you shelter is ordinary income or a capital gain. We’ll explain this further when you read the full article.
- We’ll provide a link to another invaluable article. Before you start thinking about selling your home to your S corporation, we suggest you check out a very informative article we recently wrote. You’ll find it when you read the full article.