LLC at homestead house hack

[John Kelly]

Hey everyone,

House hacker here looking for some legal direction with taxes.

I live in one of two small multi family properties that I own. I get a veterans tax exemption on my homestead. I would like to group both of these properties in some sort of limited liability corporation, but I think I lose my tax exemption once it's in the LLC. From what I'm reading we don't lose our tax exemption in a trust, but you're not protected like an LLC. Am I just looking for best of both worlds here with being protected but also claiming my tax benefit? An additional goal with the LLC is to hopefully write off some time and miles I put in on these properties as I self manage and repair. Any info helps guys thank you!

*I may also post this in the legal section as well sorry if you see both.

[Ashish Acharya]

@John Kelly You're right that transferring your homesteaded property to an LLC can often disqualify you from the homestead and veteran tax exemptions because these typically apply only to individuals, not LLCs. Here’s a potential approach to balance both goals:

1. Keep Homestead Property in Your Name: Keeping your primary residence in your name allows you to retain veteran and homestead tax exemptions. You can still maintain personal liability insurance and an umbrella policy to protect yourself on this property.

2. LLC for Second Property: Transfer the second rental property to an LLC. This will help limit your liability on the non-homestead property without affecting your exemptions.

3. Maximizing Deductions: You can still claim tax deductions (mileage, repairs, management time, etc.) on both properties as long as they're legitimately related to rental activity, even if one isn't in an LLC. Document all rental-related expenses and mileage carefully for tax purposes.

This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.