remember your LLC is not a taxable entity as far as the IRS is concerned.

@Cindy HeYou will need to furnish a 1099-INT to your parents for the interest that you pay to them.If the loan is over 2018/2019 - you may need to issue a 1099-INT for both years.You may be entitled to utilize the interest paid as a reduction in your taxable income(whether as an expense or capitalized into the cost of the property).You may also be required to issue a contractor a 1099-MISC. 

You may be investing in a 2.25% investment, but that income is then generating taxable income.

Hi Mike,The $50,000 would be considered taxable cash boot.

On weak deals like this, it will often cause the taxable income to go negative.

A refinance does not trigger a taxable event.

If your Net Sale Price is about $90,000 and you only reinvest $40,000, you will have traded so far down in value that you will trigger all of your taxable gain.  

In some cases, nothing can be done, and each member will just have to report their taxable gain, but in other cases, it might be possible to make some changes to the LLC in order to structure a 1031 Exchange. 

You can treat the receipt of the earnest money deposit as taxable boot, and defer everything else through the 1031 Exchange, or you can contribute the earnest money deposit back into escrow, then structure the 1031 Exchange transaction with a Qualified Intermediary, so that everything would be tax-deferred.Has the property been held, treated and reported as rental, investment or business use property since you in your sibling inherited the property customer.

The law lets you "exclude" this much otherwise taxable profit from your taxable income.