If you have a house that is under your company name and you want to sell it back to yourself, do you have to pay capital gains taxes?
The answer to this question really depends on the type of legal entity your business is operated through. Businesses may be operated as any of the following legal entities:
Traditional "C" Corporation
Single-Member Limited Liability Company which is taxed as a sole proprietorship
Limited Liability Company with multiple owners, which is taxed as a corporation or partnership
Each legal entity has unique tax advantages and disadvantages, depending upon the nature of the business. Let's answer this question, legal entity by legal entity.
There would be no long-term capital gains tax on the sale, but there would be regular corporate income tax on the sale if there were a gain realized on the sale. The reason for this is that C corporations do not have any preferential capital gains tax rates available to them. Generally, all of the income recognized by a business operating through a traditional C corporation is taxed at the corporate income tax rates that range from 15% up to 35%, depending upon the level of taxable income. Any asset sale by a corporation to a shareholder would be taxed if there were a gain on the sale, this includes a house. Furthermore, the sales price must represent what is called an arm's length price. Arm's length means it represents what an independent third party would pay for the home. If the sales price of the home was determined to be not at arm's length by the IRS, then there are a host of distribution-related issues that could apply, and which are beyond the scope of this article.