Selling a property from my llc to myself as my primary residence.

[Todd Plummer]

here is the situation...  i bought a single family house to flip, but decided to move there as my primary residence. I need to get a permant mortgage on the property now in my personal name. The current financing is a short term commercial loan.

Can I sell it out of LLC to myself at a loss? I bought it for 132K, have about 200k into it, and want to sell it to my self at a loss at 160k.

Is this legal?  What are the tax issues?

Thank you for any advise you may have.

[Linda Weygant]

You could take the house as a distribution from the LLC. Your equity distributions do not have to be cash - they can be other assets, including real estate.

There is no profit or loss on the deal within the LLC. From a bookkeeping standpoint, you would credit the Work In Process Asset where you've been accumulating all your costs so far and debit Member Equity Draws.

Keep it simple. Doing a sale to yourself, especially at a loss, is not an arms' length transaction and the IRS would likely disallow it upon audit. This is especially true if you are a single member LLC