Selling a house that is in the name of my LLC

[Elizabeth Woolf]

I have a house that I've been renting for the past few years and I plan to sell it to buy something closer to where I live now. I used to live in it so when I started renting it, I did a quit claim deed from my name to the LLC. What implications does this have if I sell it as the LLC? Will I have to use all of the profits for business purposes? I plan to do a 1031 exchange to buy a cheaper house and I was hoping to keep the rest of the profits for personal use (probably a 50/50 split). Are there any potential problems with this?

[Greg Clark]

I think that this becomes a tax issue first and foremost- you are permitted to pay yourself a salary from your own business, but doing so would mean it gets taxed as personal income. The sale will occur on top of whatever else you claim as income, meaning some of it may even be claimed in a higher tax bracket... So you keep less of your own money.

Without knowing a lot about your state laws, my gut feeling is to "pay" yourself as an individual as little as possible.

This reminds me of a chapter of "Rich Dad, Poor Dad" that discusses businesses playing by a different set of rules than individuals. You have gone through the trouble of setting up and running your business, so make sure you take advantage of it by speaking with your accountant.