This is the US.
As far as I'm aware as a single person you have a $250,000 capital gains exemption if I lived in the house two of the past five years. I'm planning on moving out of my primary residence and renting it but prior to doing so would like to "up" the basis while it's still my primary as I currently have around $200,000 in equity and am approaching the $250,000 limit. To keep it easy let's say I purchased the property for $100,000 and it's now worth $300,000.
- Could I sell it to a family member at fair market value, $300,000. They hold it for a few months then sell it back to me at fair market value ~$305,000. No one pays any real capital gains and my basis is now "upped" to $300,000.
- Could I somehow do the same with an LLC so I don't involve a family member. Do I legitimately have to have and move the money? I could get a mortgage but it adds cost.
- Can I use an attorney who does explicitly the above? I assume these services exist. They would draw up a contract to sell it back to me.
The thought is now that my basis is upped to $300,000 if I sell it down the road for $500,000 while it's a rental I only owe capital gains on $200,000 vs $400,000. If I decide to move back in for 2 years I can now go all the way to $550,000 without ANY capital gains vs $350,000.
Edit: This was flagged as a duplicate. In the other question they were talking about gifting it to parent. In this question I am selling it for fair market value and purchasing it back. These would be legitimate transactions with legitimate exchange of money. We would also wait out any statutory required amount of time.