@Ahad Ali + adding on, If your LLC is treated as a pass through entity then basically when the income gets passed to you.

Plus, at some point with multiple tenants, you might end up saying "no" to one tenant's situation and "yes" to anothers....and they talk, and they find out you treat them all differently.

This is due to a special rule under Revenue Procedure 2002-69 that states that a LLC owned by a husband and wife in a community property state is also considered to be a disregarded entity and for tax purposes, the property is treated as if it is owned directly by you and your spouse.

They are treated as two entirely different persons.

This section prescribes rules for tracing debt proceeds to specific expenditures.Treas Reg §1.163-8T(a)(4)Treatment of interest expense(i)General ruleExcept as otherwise provided in paragraph (m) of this section (relating to limitations on interest expense other than the passive loss and nonbusiness interest limitations), interest expense allocated under the rules of this section is treated in the following manner:(A) Interest expense allocated to a trade or business expenditure (as defined in paragraph (b)(7) of this section) is taken into account under section 163(h)(2)(A);(B) Interest expense allocated to a passive activity expenditure (as defined in paragraph (b)(4) of this section) or a former passive activity expenditure (as defined in paragraph (b)(2) of this section) is taken into account for purposes of section 469 in determining the income or loss from the activity to which such expenditure relates;(C) Interest expense allocated to an investment expenditure (as defined in paragraph (b)(3) of this section) is treated for purposes of section 163(d) as investment interest;(D) Interest expense allocated to a personal expenditure (as defined in paragraph (b)(5) of this section) is treated for purposes of section 163(h) as personal interest; and(E) Interest expense allocated to a portfolio expenditure (as defined in paragraph (b)(6) of this section) is treated for purposes of section 469(e)(2)(B)(ii) as interest expense described in section 469(e)(1)(A)(i)(III).Treas Reg §1.163-8T(c)(4)Allocation of debt; proceeds deposited in borrower's account(i)Treatment of depositFor purposes of this section, a deposit of debt proceeds in an account is treated as an investment expenditure, and amounts held in an account (whether or not interest bearing) are treated as property held for investment.

@Jeanni Prescan  we have preemptively treated this same situation, by being aware that PA Inheritance Tax was due since the owner was deceased before the sale, examples would be a probate record, or the owner of record listed as an estate. 

If it's a recent sale, as @Russell Brazil indicates, an appraiser could very well treat the property as its own comp.

Or at least get your CPA to treat it that way and take a chance in an audit.But you may not have to go so far as to separate your tax return which usually isn't advantageous. 

I'd love to meet up with you and treat you to a meal or coffee and just talk some local real estate.

I'd love to meet up with you and treat you to a meal or coffee and just talk some local real estate.