Hey James, *NOT A LAWYER DISCLAIMER (I am just a guy on the internet)* It is correct that if the home is owned in the LLC and that all expenses and handling of business are kept away from your personal accounts that you could receive some liability protection. It can be better to rent a home in an LLC, but there are many considerations. Do you currently own the home in your personal name? Does it have a mortgage? If so, which type? Transferring the home to the LLC's name with a mortgage could be an issue. Also, keep in mind that if you intend to get lending on the home down the road, lending will be much less favorable than if it is owned by you personally.
Do you currently own the home in your personal name? Yes.
Does it have a mortgage? If so, which type? 30 year fixed.
I asked our mortgage company about moving the mortgage over to an LLC and they said 'We're not lawyers, but as long as you and your wife are the only two people on the LLC as you are on the mortgage now, it hasn't been a problem for other mortgage holders we've had.'
I'm just looking to reduce as much risk as I reasonably can and it sounded like an LLC was more advantageous for that than renting it out directly. That said, I know so little right now so I'm not even entirely sure about that!
@James Berger, a) never trust your mortgage company. They are brokers that make a commission to issue you a mortgage. You need to look at your actual mortgage document and promissory note. But they are correct that even if you are not allowed to transfer, the chances of getting caught seem to be very low. The repercussions commonly are an immediate call of your mortgage, meaning you need to pay it all back NOW.
An LLC can reduce risk to other personal assets, but it also takes a lot more record keeping. Money in is owner contribution, any money out is owner distribution. Docs need signed as the LLC. If you got sued, and there was one document that you signed personally as a lapse of judgement, that may pierce the corporate veil and you are now personally liable for any ruling of the suit. This isn't overly complicated, but it does take conscious effort to make sure everything is handled correctly, every time.
Your next steps are reaching out to a tax professional and an attorney. The attorney will almost always say YES, form an LLC, since they live in full and complete liability reduction, whether those liabilities are likely or not. A CPA will know the tax implications, which there can be real tax implications, but those tax matters may not provide the best liability protection.