Rental Property from personal name to LLC

[Will954]

Hello. I have a condo in Broward County, FL that my wife and I purchased about 15-years ago under our personal names. It has been rented since day 1 and cost basis is mostly depreciated. There is no mortgage on the property. To protect my personal assets, I'm considering moving ownership to a LLC, but concerned about tax consequences. Looking for some assistance with the below:

• Would I have to pay capital gains taxes on difference between depreciated cost basis and market value?
• Does it make a difference on taxes if it gets transferred to a single member LLC vs two member LLC?
• I called the county and they said if there is a name change (i.e. to an LLC), the assessed value will be reset, which would result in a pretty material increase in real estate taxes. 
• Any other taxes if I proceed?
• Any other options that you'd recommend?

[RobertB4444]

Because an LLC is a 'disregarded entity' changing the ownership of the property over to an LLC that you and your spouse fully own will not really have an effect on your taxes.  The rental could still be reported on schedule E and all of the expenses would still be there.  The basis would not change at all for depreciation purposes even if the county raises the value.  

So this is really just a legal question for you.  And if the legal protection provided by the change in ownership on paper is worth the hassle to you then this is a good deal and you should proceed!

@Will954 

[Will954]

Is it still a disregarded entity if we both are members of the LLC? My understanding was that it was only disregarded under a single member LLC. 

Thank you!

[RobertB4444]

You are correct.   

If you file as a two member LLC then you will have to file a partnership return.  That still won't change the taxability of the rental property since the basis would transfer to the partnership along with the ownership.  So you still have no real change in income or taxes on the property.  It just involves an extra tax return and extra paperwork.

@Will954