Just purchased a duplex, should I put it under an LLC?

6 Replies

Hello BP,

I recently purchased a duplex in NW DC. It is my first RE investment and my first time being a home owner. I plan to live in one unit and rent out the other. 

Should I put the property under an LLC? If so, will my loan docs change?



A smart tax adviser once told me to never put your primary home into an LLC. I don't put small residential property into LLCs anyway, but definitely not my primary home. Good question @Connor Bell !

Hey @Connor Bell

I would chat with a lawyer to confirm the decision, since I do not know if it is a good move to place your primary in an LLC. I know many people put their primary within a trust and that is not an issue (I know that this is different than entity perfection that an LLC gives you). I do not see that it is a big issue to having a primary within an LLC. That's just me though and not a lawyer talking. Maybe @Steve Vaughan can explain more on why it would the lawyer stated it is not a good move.

You should also know that you'll need to form the LLC and then before you perform the movement on the deed you'll need to notify the company that holds the loan. If they see this change they can call the loan, which will create a lot more work for you.

Good luck! 

Sure - what the tax adviser (not lawyer) said, was you will lose that beautiful, awesome section 121 exclusion of gains on your primary home if it is in an entity.   The tax forgiveness on gains of $250k single, $500k if married on gains from selling your primary home if you have been there for 24 months.    This could be a $100,000 discussion, especially the way things go up in DC.  

There may be a little difference on the amount that is tax-free if it is a 2-family. Again, in general, in my experience, placing a residential property 4 units or under into an LLC causes more problems with financing and insurance than it solves with 'asset protection'. Hope this helps!