Welcome and thank you for giving me the opportunity to assist you with your tax question.
An LLC is a disregarded entity for tax purposes; therefore, if you form a single-member LLC, the IRS considers the taxation of the LLC as a sole proprietorship and as such, you would report the any rental income on Schedule E of your personal 1040 tax return. That being said, you could utilize a Quit Claim deed to transfer the ownership from yourself personally to your LLC. This would not trigger the Mansion Tax.
The mansion tax will increase your basis in the property for the purpose of calculating capital gains when your sell the property. Therefore, the amount of the gain upon resale will be reduced not only by capital improvements but also by the amount paid for mansion tax. Therefore, you will be able to deduct the mansion tax from any capital gain realized upon resale.
I hope this information is helpful to you. If you require further information or clarification, please let me know.
Thank you and best regards,
An LLC is considered to be a disregarded entity by the IRS. If you are a single member LLC, you are considered a sole proprietorship. Therefore, you will use Schedule E of your personal 1040 income tax return to report anything to do with the rental property. So you will be able to depreciate based on the purchase price you personally paid for the property.
It's been my pleasure, Mike.
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Thanks again, and best regards,