House hacking, 20% down, with an LLC?

Question

So I recently bought a triplex at 20% down and I live in one of the three units. I was originally going to go fha or 5% down so I put it in my name, but now that I put down 20% should I put it into an LLC? I would like to take advantage of using it as my primary residence for 2 years so that way i can take advantage of not paying capital gains after 2 years of living their. Can I do this with it in an LLC or must I keep it in my name? Thanks!

Sonny Christopher · Answer

It will depend on your state laws but my questions is why would you want to move it to an LLC? Not sure if there is much of a benefit if doing that while you live there.

Also as mentioned above- the capital gains only comes into play if you are planning on selling. So if you are planning on keeping it, my understanding is that you would only need to live there for 12 months in order to qualify for low down payment loan options if you wanted to purchase another owner occupied property. Of course, talk to your lender as they will know with certainty what that time requirement is.

Alacia Mahnken · Answer

Living in your home the next 2 years to avoid capital gains tax only applies if you are planning to sell it within the next 5. Is that your plan? If so, I don't see any benefit in putting it in an LLC.

Melvin List · Answer

@Bryce Kennebeck In Florida the Homestead exemption is only offered individuals and not LLC's.

Ryan Thomson · Answer

@Bryce Kennebeck not sure how moving to an LLC impacts your ability to take the primary residence tax benefit. Talk to a CPA for sure.

Best way to get money out of that is going to be a HELOC at this point. Unless rates have dropped or stayed close to the same than a cashout refinance might work and take some money out.

I know lenders (and have used them) in Colorado Springs that are offering 90% LTV HELOCs on investment properties and 95% LTV refinances on primary residences. With some searching, you can find the same in Tampa.