Selling Commercial Real Estate Held in an LLC: What You Should Know

If you own a commercial property through a Limited Liability Company (LLC), you might be wondering:
 Can I sell my property if it’s held in an LLC?
 The short answer: Yes, you can—and in many cases, selling through an LLC can provide both flexibility and tax benefits. But there are a few key legal, financial, and practical considerations you should understand first.

Whether you’re thinking about selling an industrial building, retail center, or office asset, this guide will help you understand how the LLC structure impacts the sale—and how to prepare for a smooth transaction.

Why Hold Commercial Property in an LLC in the First Place?

Before diving into the sale process, it’s worth remembering why most commercial investors choose to use an LLC:

  • Liability protection for personal assets

  • Pass-through taxation (profits and losses flow to members)

  • Flexible ownership structure (great for partnerships or family trusts)

  • Easier asset management and succession planning

These benefits carry through to the sale—but depending on how your LLC is structured, the process may be slightly different than selling a property as an individual.

Option 1: Sell the Property (Asset Sale)

In most cases, selling commercial real estate held in an LLC is straightforward: the LLC sells the property, and the proceeds are distributed to the members according to their ownership percentage.

Key Steps:

  • Confirm the LLC operating agreement allows the sale

  • Get member approval if multiple partners are involved

  • Work with a broker to price, market, and negotiate the sale

  • Coordinate with your CPA or attorney on tax reporting and profit distribution

💡 Important: The LLC remains intact after the sale, unless you choose to dissolve it.

Option 2: Sell the LLC Itself (Entity Sale)

In some cases, especially with institutional buyers or tax-driven deals, it may make sense to sell the LLC entity rather than the property itself.

When would you do this?

  • The buyer wants to avoid paying transfer taxes (where applicable)

  • You’re working with a 1031 exchange and want to defer capital gains

  • The property has long-term contracts, licenses, or entitlements tied to the entity

  • You’re selling a portfolio or structured investment product

⚠️ Caution: Selling the LLC can trigger different tax consequences and may require legal due diligence (including membership transfer agreements, liability assessments, and clean financial records).

Tax Considerations When Selling Commercial Property in an LLC

Selling a property owned by an LLC can have several tax implications, including:

  • Capital gains tax (on the profit from the sale)

  • Depreciation recapture tax

  • Possible state transfer taxes or franchise tax

  • If you’re a multi-member LLC, individual member tax filings may vary

To minimize your tax exposure:

  • Work with a qualified CPA or real estate tax advisor

  • Consider a 1031 exchange to defer capital gains if you’re reinvesting in another property

  • Make sure your cost basis and depreciation schedules are accurate before closing

Practical Steps to Prepare for a Sale

If you’re considering selling commercial property held in an LLC, here’s how to get started:

  1. Review your operating agreement
     Confirm who has authority to sell and what vote or consent is required.

  2. Organize your LLC documents
     Buyers and lenders will want to review:

    • Articles of organization

    • Operating agreement

    • EIN confirmation

    • Member list or cap table

  3. Get a professional property valuation
     Understand the current market value based on location, income, cap rates, and condition.

  4. Consult your legal and tax advisors
     Avoid surprises—especially when it comes to profit distribution, liability, and dissolution.

  5. Partner with an experienced commercial real estate broker
     A broker who understands LLC-held assets can guide pricing, strategy, and deal structure.

Thinking of Selling Your LLC-Owned Property?

Whether your commercial real estate is held in a single-member or multi-member LLC, the team at CommercialGrp.com can help you:

  • Navigate the sale process with minimal tax impact

  • Coordinate with your legal and financial advisors

  • Market your property discreetly or broadly, depending on your goals

  • Evaluate the pros and cons of an asset sale vs. entity sale

Request a Confidential Property Valuation

Get expert insight into your property’s current market value—no obligation, just clarity.

Final Thought

 Selling property in an LLC is entirely doable—but the details matter. By taking the right steps early and working with professionals who understand the legal and financial landscape, you can exit with confidence and maximize your return