Turning personal property into business' property for spec home

[Jayme Walker]

My husband and I have an LLC - we build spec homes.

We personally own our own home on 2 acres. There is a split available, we have done a survey, and we are about to apply for the partial release with our mortgage company. We would continue living in our house on one acre, and on the other acre, we would build a spec house. We plan to sell the spec house in Spring 2022 and a few months later we will sell the house we live in. By then we will have lived here for over three years.

We want to put the acre lot in our business' name before we start building and I am wondering the best way to do this in terms of taxes and legal.

I understand that if we were to sell the empty lot to someone else, we would personally receive the money and would not have to pay capital gains tax. We currently could sell the lot for about $80K. The difference though is we would be "selling" to our own business and building on the lot, so I am wondering how to set everything up so that we don't have to pay taxes that we wouldn't have to pay if we sold to someone else.

Our mortgage company said we need to have a buyer in order to do the partial release (no transfer). So my idea is this:

• -Business gets a private loan for $80K in 2021 for the land purchase. Business also gets a separate loan for the cost to build.
• -Business uses $80K loan to "buy" lot from ourselves
• -Once we receive the $80K from our business, we then immediately lend the $80K back to our business to finance the land purchase part of the project.
• -Business then immediately pays back the private loan to family right away. Business still has the cost to build loan and now has a land loan to us personally.
• -We complete the project in 2022 and put it up for sale.
• -House sells. Business pays out the cost to build loan, closing fees, etc. AND the personal $80K land loan back to ourselves.
• -Business pays income tax on whatever is left after that, which excludes the $80K.

Does this makes sense? Is it okay to do? Is there are better way? Is our LLC considered a separate entity from us? Any considerations or issues we should be aware of?

I have reached out to an accountant and was confused by their answer, so I thought I would post here.

Thank you so much!