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Message
Selling My Home to My LLC
Posted on 2/2/16 at 2:14 pm
Posted on 2/2/16 at 2:14 pm
Forgive me if this is an idiotic question....
BUT would it be beneficial for me to sell my residence to a LLC (owned by me)? The thought process behind this is that it would reduce my debt to income ratio when shopping for a new home and would also give me the ability to rent my current residence down the road under the shelter of a LLC. Would I be able to claim improvements as a business expense?
BUT would it be beneficial for me to sell my residence to a LLC (owned by me)? The thought process behind this is that it would reduce my debt to income ratio when shopping for a new home and would also give me the ability to rent my current residence down the road under the shelter of a LLC. Would I be able to claim improvements as a business expense?
This post was edited on 2/2/16 at 2:15 pm
4
Posted on 2/2/16 at 2:31 pm to Hoyt
mortgage lender will still count it against you if you have any personal liability to the LLC, which 99.9% of the time you do. I have seen 2 in the past 10 years where there was not any personal responsibility. If that is your main motivation, you wont gain much. As a rental prop, you bring in many other factors that could be advantages, but if you are simply looking to reduce your DTI, a reputable lender will see though that.
Posted on 2/2/16 at 2:46 pm to Helmethead
quote:
As a rental prop, you bring in many other factors that could be advantages
Please elaborate
Posted on 2/2/16 at 2:48 pm to Hoyt
would you loose your homestead exemption?
Posted on 2/2/16 at 2:53 pm to Hoyt
pro and cons of an LLC for rental properties can go on forever, really depends on what you want. Are you doing just this 1 property? Trying to get up to 10? more? How is it insured? If it were destroyed what would you be out? The definition of an LLC limits your liability, is this important to you? If in an LLC, not Fannie Mae eligible for a refinance. Depending on your relationship with your bank, they might do an in house loan for you, but you might not ever need this....very long discussion, that is dependent on your specific situation. Not really a blanket answer...
Posted on 2/2/16 at 3:06 pm to Helmethead
quote:
Helmethead
Thanks for the info. I have a solid relationship with a local credit union (with a Business Dept) and I am confident I could get a mortgage loan either personally or thru a LLC.
Posted on 2/2/16 at 3:38 pm to Hoyt
When I bought a second house I used a signed lease already in place for the first place to increase my income to debt ratio. The bank was very acceptable to the conditions.
Posted on 2/2/16 at 4:22 pm to Hoyt
It makes a lot of sense, from a legal standpoint, to put rental property in an single member LLC. From a tax and from a mortgage qualification, it makes no difference whether it is held personally or through a single member LLC.
If you put the personal residence inside an LLC, you may well lose your homestead exemption. You may also run into matching problems with the IRS, as the 1098 will be in the name of the LLC, but you are claiming the interest expense on your Sch A.
I can not think of a single good reason to put a personal residence inside the LLC, unless I am one of those shyster "attorneys" who sell LLCs.
If you put the personal residence inside an LLC, you may well lose your homestead exemption. You may also run into matching problems with the IRS, as the 1098 will be in the name of the LLC, but you are claiming the interest expense on your Sch A.
I can not think of a single good reason to put a personal residence inside the LLC, unless I am one of those shyster "attorneys" who sell LLCs.
Posted on 2/2/16 at 4:38 pm to Hoyt
quote:
I have a solid relationship with a local credit union (with a Business Dept) and I am confident I could get a mortgage loan either personally or thru a LLC.
i hope it works for you but sometimes the relationship is hand tied by the feds.
Posted on 2/2/16 at 4:41 pm to LSUFanHouston
quote:Estate planning purposes. It is easier to administer a property as an LLC than as a property with undivided interests. The LLC can act with a single signature based on majority of interests whereas the owners with undivided interests may have to act unanimously.
I can not think of a single good reason to put a personal residence inside the LLC, unless I am one of those shyster "attorneys" who sell LLCs.
Posted on 2/2/16 at 5:53 pm to Poodlebrain
quote:
Estate planning purposes.
1) QPRT with a single trustee
2) Set up an LLC in advance and don't fund it, leave the property to the LLC in the will.
Posted on 2/2/16 at 7:13 pm to LSUFanHouston
I appreciate all of the responses guys
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