It overrides the 1231 treatment you are arriving at. 

Hello – I'm looking for confirmation of understanding/ advice relating to transferring property into LLC and treatment from a tax perspectiveMy parents completed a 1031 exchange over 2 years in their own names – they file a joint tax return.

However, I will say that LLC is not recognized in Canada and deemed a foreign corporation, resulting in unfavorable tax treatment.  

@Greg JungeFrom the tax side your CPA/EA will have to start tracing disbursements to ascertain the tax treatment of related interest.Also if you take a draw from the HELOC, and put in a checking/savings account for a month or number of months while you look for a deal, it's not business interest like most would think. 

Tax treatment of LLCs is very controversial in this case.

Hey Elizabeth, Since you are selling your business you are likely getting capital gains treatment on that gain if you have owned the asset for over 12 months.

I am probably going to try renting my unused basement for STR in any event due to incremental cash flow (STR loophole or not due) but wanted to check on the right accounting treatment. https://podcasts.apple.com/us/podcast/tax-smart-real-estate-...

I would say accountants have to gain here as well, I would add the entity doesn't result in better tax treatment, ideally, it is not done (in general).

When comparing syndication to a pure investment property (you are not Owner occupying any portion) the treatment is generally the same.  

This would make only half of the purchase eligible for 1031 treatment.