Transferring personal money to LLC - Any issues??

Question

Im in the process of searching to buy my first property... This will be an investment property (apartment)

Im told by friends that its best to buy as a "first time home buyer" instead of setting up an LLC and buying as "an investor" - for tax purposes? Does this make sense?

Also, if i were to set up an LLC and buy through that, are there any issues with transferring my personal savings/money into the LLC and buying with this? Do i need to look out for any tax hits for doing such a move? Both personally and as a business owner!

Thanks

Frank Chin · Answer

There's some major differences between buying something as a home vs buying an investment property via an LLC. Among the advantages of homeowning:

1. It's easier to get a home mortgage and at lower rates.

2. When it's time to sell, the first $500,000 of your capital gains is excluded.

3. Homestead laws in many states protects your home from creditors. Depending on where it is,  it's better than LLC's as you don't have the issue of piercing the corporate veil.

So if you don't already own a home, these are the major considerations. I had a SFR as my home for a while, before I did real estate investing, but bought a triplex and moved into it have homeowner advantages and also the benefit of rental income. You can get a regular home mortgage up to a 4 family.