Homestead exemption w/ LLC?

Question

I Just realized my 1st rental property lost its Homestead Exemption and next month my mtg is going to increase by $400+... Luckily this property still cash flows, but I definitely want to fix this for this one and all future properties.

My next move was going to bring this property under an LLC, is there a way to LLC and keep homestead? I am sure someone has figured out how to maneuver around this.

Thanks in advance.

Scott Smith · Answer

Homestead exemptions vary from state to state, so be sure to make sure this applies in yours, but the basic concept is the exemption protects all or some of the value of the home from certain creditors and offers tax protection as well on property taxes.  Most times, the home must be the individual's primary residence and the individual must affirmatively claim the exemption with county or state officials.  On whether the Client should transfer their homesteaded property into an LLC I would say this: homestead property is already protected under statute, but the value of the home may be more than the statutory protection. If the value of the home is less, then leave it alone. If it is more, then you should consider removing the equity in the property that is above the statutorily protected amount.

This isn't legal advice, just my opinion as a real estate investor. Be sure to double check your state laws to be sure it operates in this manner. Let me know if you have other questions.