Carl
Level 15

Business & farm

I am assuming you own the property *AND* that you are a member of this multi-member LLC that was established in 2019.

The start date of the multi-member LLC ***MUST*** be the same date that the rental property was originally placed in service, or a date before that date. It ***MUST***, or you'll be audited. Doesn't matter if it was years ago either.

The fact is, the "rental business" started years ago when that rental was first placed "in service". Then "the business" became a multi-member LLC. So "the business" started long before it became a multi-member LLC, even if years before. Therefore the start date of "the business" on the form 1065 ***MUST*** be the date that rental property was placed in service, or before that date.

The only legal way around this is if you actually sell via a formal mortgage loan, the rental property to the LLC. But with you being a member of that LLC, the tax reporting on the sale will be an absolute nightmare.

If you sell it to the LLC, then you as the seller are required to recapture all prior depreciation on the property and pay taxes on it in the year of sale. Then for the LLC it would be newly acquired property and depreciation would start all over from year one.