Can I buy my personal home through LLC? (Live in flip)

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Can I buy my personal home through LLC? (Live in flip)

Timothy Metra
Augusta, GA · Member since 2017 · 65 posts · 5 votes

I'm not sure if this differs by location, but if I buy a home and live in it for at least 2 years, I can sell the property without paying capital gains tax on the profit.

I was wanting to do a live-in flip. Buy a home and fix it up while living in it, then sell it after the 2 year mark.

Can I purchase the home through my LLC, write off (taxes) the material costs of upgrading and possibly adding a deck etc, and then end up ultimately selling it? Or is this not something you can do on a personal home?

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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
9y
Timothy Metra When you go to sell it you will pay taxes on the profits if it is an llc whereas if you buy it as a single family you do not pay profits on first $250k (note I am not an attorney or accountant) I know of someone that does this but buys it as his personal not LLC
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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    9y
    Timothy Metra When you go to sell it you will pay taxes on the profits if it is an llc whereas if you buy it as a single family you do not pay profits on first $250k (note I am not an attorney or accountant) I know of someone that does this but buys it as his personal not LLC
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  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    9y

    If you buy it with an LLC, you do not get the tax free benefits of a primary residence when selling, and you can't get owner occupant financing. You couldn't write off the renovations as an LLC anyway, they get added to your basis, just as if you bought it personally. Buy it on your personal name.

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  • Timothy Metra
    OP
    Augusta, GA · Member since 2017 · 65 posts · 5 votes
    9y

    @Chris Seveney thanks for the reply, I'll probably just buy personal then. I doubt I would end up making more money paying taxes after selling and saving on the material costs of write offs 

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  • Timothy Metra
    OP
    Augusta, GA · Member since 2017 · 65 posts · 5 votes
    9y

    @Wayne Brooks thanks for the info my friend, will do!

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  • Jonathan Bukowiec
    Rental Property Investor · Fairport, NY · Member since 2015 · 16 posts · 5 votes
    9y

    @Timothy Metra Going off what @Account Closed was saying, you can transfer it to an LLC after the purchase and there is the possibility of the bank calling the loan based on the "due on sales clause." However, if the LLC is in your name and the bank can see that you essentially transferred it to yourself, as long as they get their money it is highly unlikely they will do anything. But it all depends on your risk level.

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  • Brandon Hicks
    Investor · Avilla, IN · Member since 2013 · 796 posts · 769 votes
    9y
    If you're married, put it in your wife's name. Keep other ventures that are purely for investment in your LLC. My wife owns the home we live and my LLC owns all my rentals. I "own" nothing. The bigger reason is like the others said...there is no tax advantage to NOT owning it personally. In fact...it's the opposite. The only way I would say to put it in both of your names is if you think you'll clear more than $250k over your basis.
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  • Timothy Metra
    OP
    Augusta, GA · Member since 2017 · 65 posts · 5 votes
    9y

    @Account Closed, I don't listen to many gurus, I listen to the BP podcasts a lot but I don't necessarily go into planning my own deals without a ton of research. I honestly don't know why someone would get the loan in their own name and then transfer it to their LLC, I personally don't see any advantages in that at all. I would like to do the BRRRR strategy though and the only thing that scares me with that is having 10-15 houses through my LLC and the lender calling the loan. Do you think I should do my BRRRR homes through my own name or an entity?

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  • Timothy Metra
    OP
    Augusta, GA · Member since 2017 · 65 posts · 5 votes
    9y

    @Brandon Hicks the only downside to me never wanting to get married is taking advantage of what you're saying I should do! haha. Do you use the BRRRR strategy? I'm considering this, but I'm concerned with having so many properties in my name. Even with each having a decent bit of equity, is the bank calling the loan something that worries you?

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  • Brandon Hicks
    Investor · Avilla, IN · Member since 2013 · 796 posts · 769 votes
    9y

    I use private money or seller financing to acquire my deals and eventually refi with a small bank that lends to my LLC with a personal guarantee from me. I have 17 units with that bank and the rest are still on private paper.

    There is no limit to how many properties you can finance as long as you go to actual lenders...not brokers...who don't actually have money to lend. 

    Just my two cents. 

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