Should my second property be in my wifes name?

Question

Ive heard from a few people that if you own and occupy a current home and want to hold on to it and rent it out while buying a new home elsewhere it is best for tax purposes to put the new home in your spouses name.

I havent been able to find anything online about this or what the specific advantages are. I purchased a condo 5 years ago that my wife and I now occupy. If we purchase a new home and rent out our current one what is the best way to set this up? Do I put the new home in my wifes name? Do I create an LLC and put the existing home into it?

Any help would be great.

Kevin Siedlecki · Answer

The benefit of putting a property in your wife's name is for accessing financing later.  Basically, most banks limit you to a certain number of loans.  If you plan to buy more than 4 total properties, then you should put some in your name and some in hers.  It should not make a difference for taxes, although I am not an accountant, so I can't say for sure.

I'm also not a lawyer, but the LLC would be to protect you from liability claims.  If you set up and operate your LLC properly, you cannot be personally sued by a tenant, and you cannot lose any personal assets.  There are a lot of threads on here about using LLCs, including a big blog debate a few weeks ago:

http://www.biggerpockets.com/renewsblog/2015/06/06...

and: http://www.biggerpockets.com/renewsblog/2015/06/14...