Discussion:Personal residence transferred to limited partnership
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Discussion Forum Index --> Tax Questions --> Personal residence transferred to limited partnership
| 19 June 2007 | |
| I have a client who transferred his personal residence to a limited partnership and now wants to sell. I told him I didn't think he could take the section 121 exclusion. I told him he could transfer the house to his name and then wait two years, but I thought the transfer would be considered a deemed sale, and the partnership would have to report a gain on the appreciation since it took title. Any ideas or suggestions, or something I'm missing? I know this is similar to discussion below - sorry for starting a new thread. | |
| 20 June 2007 | |
| I believe you are correct on no Sec 121. However, the transfer of property out of the ltd ptshp should not be a sale; just a transfer of adjusted basis to a partner (gain realized on subsequent sale). | |
| 20 June 2007 | |
| Treas. Reg. 1-121-1(c)(3)(ii) says that single owner entities that are disregared for tax purposes get the exclusion. I had wondered if an H&W owned entity would qualify, but, in any event, no exclusion.
How long has the residence been in the LP, though? If it were 3 years or less could he still claim the exlusion on the sale, assuming the LP transferred it back to him, based on Treas. Reg. 1-121-1(c)(1). | |
| 20 June 2007 | |
| Unfortunately, husband and wife own the partnership 50-50 (well, 49-49 with 2% going to general partner) and the house has been in P/S over three years, but thanks muchly for the advice. | |
| 20 June 2007 | |
| Why would anyone want to "donate" their residence to a 2% unrelated general partner? | |
| 20 June 2007 | |
| Thanks. If that is the case (residence is now owned by a business entity, not a disregarded entity), how can the argument be made that it would qualify for §121? A business entity doesn't have a "residence" which qualifies for §121. | |
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