Rental Property Investor · Baltimore, MD · Member since 2018 · 41 posts · 23 votes
Hey BP people!
I've recently closed on a property in Baltimore that will be my primary residence when I get back from a deployment in the next few weeks, and have 2 questions that I'd love some help on:
1. I am house-hacking by bringing roommates in, so can I transfer the title from myself to my LLC to protect personal assets? If so, does anyone know approximately how much this costs?
2. If an LLC owned by me owns the property, can I legally collect rent from my roommates through the LLC? I guess I just don't how a property financed through VA Loan can be utilized. It will remain my primary residence, so to me that means it satisfies the terms of the loan.
@Connor Corkrin Unless you have lots of assets you may be better to buy an umbrella policy. It will cost you about the same dollars per year. I was quoted $175 for a $1,000,000 policy for a year. I'm not a lawyer but what is your liability if you leave a shoe and one of your tenants trips over it. Are they only going to sue the LLC or you personally or both.
@Connor Corkrin Unless you have lots of assets you may be better to buy an umbrella policy. It will cost you about the same dollars per year. I was quoted $175 for a $1,000,000 policy for a year. I'm not a lawyer but what is your liability if you leave a shoe and one of your tenants trips over it. Are they only going to sue the LLC or you personally or both.
Accountant · Englewood, OH · Member since 2019 · 87 posts · 43 votes
7y
@Connor Corkrin for a house hack it is probably best to keep the property out of the LLC, especially if you are utilizing a VA loan. Umbrella insurance is probably the best route
@Connor Corkrin An umbrella policy kicks in after the policy limits are reached in any policy you have:car or residence. You still have to file your LLC at the state and there are continuing fees for that. I'm not a CPA but outside of a LLC you can still deduct expenses based on a percentage of the house occupied by others. Talk to a CPA I don't think you are allowed to take all expenses and deduct them.
@Tim Herman is right regarding the umbrella insurance .
You can still deduct expenses without an LLC. The big issue with wanting the property in the LLC is that the LLC can't have a VA loan. Also you don't really want a personal asset in an LLC. Are you only renting out rooms in the house? If you are just renting out rooms, then all expenses will be allocated based on the portion of the house you are renting out. If you have more detailed questions let me know, I'd be happy to help