LLC Initial home purchase

Forum|Forum|6 years ago
February 8, 2020
2 replies
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Hello,

My wife and I started an LLC in 2019. How should our initial property purchase be handled in form 1065. Are closing costs, taxes and costs related to the purchase, which were drawn from our personal accounts, be considered capital contributions ? Or should these costs be reported on our standard tax returns?

DavidS127

Level 13

When you contribute money to your LLC partnership, it is considered either a capital contribution or a loan from partner(s).

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Rick19744

Level 13

To answer your specific question........."yes" those costs should be considered a capital contribution to your LLC and included in the basis of your property.

*A reminder that posts in a forum such as this do not constitute tax advice.Also keep in mind the date of replies, as tax law changes.

ciquoAuthor

Level 2

Thanks for the reply. When you say included as the basis of you property, does that mean the property value + plus the money we put in should be included on books ? Partner contributions as for cash and property contributed and I am not clear on how the initial home purchase should be represented in the balance sheet.

ThomasM125

Level 15

Money you contribute would be added to your partner's equity accounts based on who contributed the money. If the funds were used to purchase or improve real estate, then you would add those expenses to the cost (basis) of the property.

If all you are doing is purchasing real property to improve or hold for later sale, then all of your costs would be allocated to the cost of the property and would not be deducted on your tax return until you sold the property.

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