Quit Claim from your name to LLC, and taxes

Is there a transfer tax or some other tax consequence to this, since the property is changing hands? Thanks.

It depends on the state and those with transfer tax impose a tax if the ownership of the entity changes.

I’ll check my local laws to find out about this.

It varies from place to place.

From an income tax perspective, it will depend on who the “quitter” is and who the “recipient” is.

In the case of an individual (quitter) Quit Claiming from their own name to that of an LLC (recipient), this is generally a tax-neutral event. There are a few tax traps though. The most prevalent I’ve seen:

If your LLC has elected to be treated as an S-Corporation for tax purposes, be careful not to quit claim a deed to the LLC if the underlying property has an outstanding mortgage balance greater than the purchase price.


Let’s say an individual has purchased a property in his own name for $150,000. Three years and a few refinances later, the outstanding mortgage balance on the property has risen to $200,000. Let’s say the individual has decided to quit claim the property to his LLC / S-Corporation hybrid. Doing so would trigger a taxable gain of $50,000 ($200,000 mortgage minus $150,000 cost basis). :banghead

***The theory - the IRS detests when taxpayers try to shift debt laden assets to corporate structures (C-Corp’s included!) and thus deems such transfers as a construed sale, as if the individual sold the property for a price equal to the outstanding mortgage. Lesson of the story - be particularly careful when dealing with properties carrying a mortgage balance heavier than the initial purchase price.