Question for Home Owners ... ?

Question

Question to current Home Owners,

Has anyone put their home into an LLC or other kind of entity for asset protection or 
tax benefits  ??

I just bought a single family home and was wondering if i should put it in an LLC for asset protection or tax benefits.... ?

Thanks for any tips!

Steven Hamilton II · Answer

Nick Frank,

There is no tax benefit to putting your home into an LLC.

-Steven

Simon Campbell · Answer

@Billy  Pocket Any knowledgeable attorney is going to be able to easily track back the paper trail to show that you have an interest in the property and are the true owner. Lawyers are adept at attaching as many assets as logistically possible.

Here is another thought. Putting your home in a LLC will remove the homestead exemption. This will no doubt cost you thousands every year in extra property tax - especially in CA. Add those additional thousands together over 10 years and compare it with the likelihood of getting sued and losing your home.

Billy Pocket · Answer

It's my understanding that you don't want any property in your own name if you can help it.. That's a good way to get sue happy people to not bother you.. I'm just saying if you have money that is..

Simon Campbell · Answer

Well, out of curiosity, I decided to dig a little deeper. Here is a link to an article that discusses liability of an owner's interests in a LLC. If I understand the article well, a judgement against a member of the LLC could require liquidation of the membership interests which would include any real estate.

http://www.nolo.com/legal-encyclopedia/llc-protection-members-personal-debt-california.html

Usually LLCs are formed to protect your personal assets (which are not in the LLC) from any business incurred liabilities. I have not heard of a good reason to put your personal assets in a LLC to protect them from a personal lawsuit.

There is an article in BiggerPockets that touches on this:

http://www.biggerpockets.com/blogs/261/blog_posts/659-is-my-home-protected-in-a-lawsuit-

Nick Frank · Answer

Simon :   It's in California by the way if that changes anything about your reply...   Thanks for the reply !

Bob C. · Answer

I have a million dollar umbrella policy that helps protect me -despite having only one rental property.  I also carry 1 million in liability/2 million per incident commercial policy on my rental.  Not in LLC.

Simon Campbell · Answer

If someone slips and falls, your homeowner insurance will cover this.

Now if you are personally sued, the law steps in to protect your homestead.  Some states have a cap on the amount of equity a lawsuit can remove from the home. But I believe all states do not allow a lawsuit to take your home.

The tax benefits to keeping your home in your name completely outweigh any potential for loss of your residence through a lawsuit. Generally speaking, the only properties that are put in a LLC or other shelter are investment properties.

Check out this article to learn more: http://www.rjmintz.com/misc/asset-protection-articles/protecting-your-home-from-lawsuit-risk/

Nick Frank · Answer

Does everyone here have their own home in their own name
or is it benficial to have it in a trust or something else ??

Nick Frank · Answer

What about asset protection if you got sued ?

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