transferring rental property to college going son

[Craig Sutta]

I have a rental property in my hometown that I bought 5 years ago and is generating good income. Its fully paid off. For tax purposes, I want to transfer this property to my son (student 18 years – going to college 2000 miles from home). He can use the income from the house for college tuition & he can travel back hometown to manage the house. House has 20% appreciation & I have taken 5 years of depreciation in my taxes. I get W2, he works summers & has a small income to report in his 1090 in the year.

What is the best way to structure the sale, so we can optimize for taxes during sale & future (next 3 years when he will be studying):

• 1)Should I transfer 100% to him (deed transfer – should sale price be $1?)
• 2)Should I & him jointly own it 50/50
• 3)Should I set up an LLC (NOT trust) that owns the house & we both are partners in LLC?