How do I handle a rental property that I transferred to an LLC?

[chirpieguy]

We had a personal rental property that we transferred to our LLC.

Since it was a transfer from ourselves to ourselves there was no profit or loss involved. 

How would we fill out the section below? Appreciate any guidance!

[Mike9241]

who is we - husband and wife?  In a community property state the reporting doesn't change.  a schedule  E reflecting each taxpayer's (H&W) interest in the property. thus 2 columns are need for each property.

in a non-community property state a multi-member LLC, even if the only members are husband and wife must file a partnership return if the rental is a business. In my opinion, it would be hard to argue it is not a business if you take the Qualified Business Income deduction for the rental.

IRS view

A husband and wife can use Qualified Joint Venture (QJV) reporting for rental real estate under specific circumstances. Here’s how it works:

1. Eligibility: To qualify for a QJV, both spouses must:

   • Be married and file a joint tax return.
   • Co-own a rental real estate business.
   • Not operate the business as a formal partnership or LLC.

[chirpieguy]

Thank you for your response! Apologies, I don't think the reply answers the question being asked. 

To clarify, we are a husband and wife partnership LLC. We moved the property from ourselves to our LLC for potential liability reasons. We have reported this rental property on our K1. 

What we're trying to figure out is how this should be entered into Turbo Tax. Looking at the screenshot I posted above, should we be entering the fair market value of the property? Or should we be entering 0, since this was sold for no net loss, no net gain (We transferred from ourselves to ourselves)? We're trying not to screw up our base and avoid getting taxed twice on the value of the house when we go to sell.

I hope that makes more sense. Thanks!

[JamesG1]

You are entering the disposal of the real rental property on your personal 1040 income tax return.  The TurboTax Help, How do I enter a rental property I contributed to a partnership or LLC?, states:

To “dispose” of your property in TurboTax, enter it as a sale with no gain or loss. The “sale” price will be the adjusted basis (cost less accumulated depreciation). You will also use this same number as:

(1) the value of your contribution to the partnership, and 

(2) the basis of the property on the partnership’s return.

For example, if you contributed a $100,000 rental property with accumulated deprecation of $60,000, your adjusted basis would be $40,000.

In the example above, the purchase price of the rental property was $100,000, less accumulated depreciation of $60,000 left an adjusted basis of $40,000.  If the land price was $10,000 (land is not depreciated), and no sales expenses apply, the sales price would equal the asset basis.   The numbers would be:

Asset sales price            $40,000

Asset sales expenses    $0

Land sales price             $10,000

Land sales expenses     $0

@chirpieguy