Question On Tax Implications

[Tim C.]

Hi guys looking to get some general advice on my situation.  I own 12 properties in cash in LLCs (disregarded entity so I file taxes in my own name not the LLCs) but am a foreigner so have only found 2 banks that can provide financing for me.  I'm looking to pull money out of these properties and the bank I am dealing with will only provide loans for new purchases not cash out refinancing.

I plan to sell the property from my LLC into my individual name (the bank will be none the wiser as they can't find the beneficial owner of the LLC). I am looking to understand the implications of this from a tax perspective. The property was purchased in Dec 2013 for $60k, $20k rehab fair market value is $130k.

Case A

if I sell the property to myself at $80k my understanding is:

i) zero capital gains tax (as cost base includes rehab so cost = $80k, sales is $80k)

ii) zero income tax

ii) whatever depreciation i claimed in 2014 I need to write back and pay 25% on

Case B

if I sell the property to myself at $120k my understanding is:

i) Capital gain of $120-$80k = $40k taxed at around 25%

ii) zero income tax

iii) whatever depreciation I claimed in 2014 I need to write back

UNLESS I do a 1031 exchange.  

The part I don't get is that given the LLCs are disregarded entities is, if I do a 1031 exchange and have effectively sold from LLC to myself and buy another property using 1031 am I still subject to deferring the capital gains tax?

It would be LLC sells to Tim, LLC buys another property.

Any comments appreciated I know it won't be formal tax advice!

Thanks