Tax: Transferring property from LLC to husband and wife name

[Lex Shan]

My wife and I own an LLC 50/50 and the LLC holds title to residential properties. To take advantage of lower interest rate, all banks require us to hold title in personal names. I was told transfering proeprty from LLC to personal names is considerred distribution and we need to pay tax on the base based on the FMV of the property. Is this true? If so, putting properties into LLC sounds like a blackhole, once the property goes in, you can't really get it out without paying tax. Consider that the before and after ownership is the same (50% for each of us), is there a way to avoid it? any exemption or election we can take advantage of??

[Eamonn McElroy]

Unless you've made a corporate tax election for the husband-wife MMLLC, it is generally taxed as a partnership.  If it is a partnership, distributions generally are a not a tax event.  I would confirm with your tax professional who can examine the specifics of your individual partnership.