By An LLCs are meant to provide privacy to your business. Many people prefer registering their personal properties as an LLC. That’s why I get a lot of questions like, “Can I live in my LLC rental property?”
Yes, you can live in a house registered under LLC. It will bring you some incredible benefits like flexibility regarding rental agreements, professional maintenance facilities, and others. Besides all these, you must consider certain disadvantages.
To keep it safer, you can stick with this article. I will explain the pros and cons before you decide to live in your LLC-registered house.
Yes, if your LLC owns your house, you can certainly live there. It will be more likely to buy a house with an LLC and rent it out to yourself. Many people prefer doing that to enjoy its additional legal advantages.
If you are living in a house owned by your LLC, it is essential to keep your personal and business finances separate. This means that you should not use personal funds to pay for expenses related to the property and vice versa.
When someone purchases their house without an LLC and somehow gets sued, there is a high risk of losing their property at once. But, with an LLC, you will be getting the shelter of an LLC operating agreement,
You should not ignore its potential risk as well. Living in your LLC-owned house can weaken your tax benefits.
Who Should Consider Buying a House with an LLC?
Buying a house with an LLC is not for everyone. However, if you are a real estate investor and ready to spend on several houses or personal properties, you can purchase a house with an LLC.
Maintaining an LLC will be hectic. It takes quite a good time and effort. Doing all these for one house is not worth it. Moreover, you have to pay the maintenance costs of the LLC from time to time.
If you are planning to purchase a considerable large amount of commercial property, get an LLC.
Why Would Someone Put Their House Into an LLC?
Buying a house with an LLC will bring out some of the most exciting benefits for the owner.
First of all, you can enjoy passing through taxation benefits. This policy will save you from double taxation. You can run both the business and enjoy living in the bought house with minimum tax.
Besides, you can enjoy other LLC benefits that you are bound to enjoy with any business. These can be additional privacy, asset protection, minimum risk, and ownership flexibility.
Disadvantages of Buying a House with an LLC
The first disadvantage of buying a house with an LLC is the cost. You will be shown up as an investor rather than a buyer of a primary residence. Then, you have to pay a certain amount of legal fees, around $40 to $500.
You must pay annual report fees, license renewal fees, and registration fees individually. You might also need to hire a professional for legal advice.
Managing a rental property through an LLC can add some complexity to the process. It might be hectic for you as an owner to go through this documentation in bulk.
How to Buy a House With an LLC?
Purchasing your house with an LLC is a great idea. You just have to keep all the paperwork clean. The process might vary depending on the state in which you are buying the house and owning the LLC.
Here are certain steps no one can skip:
- If you don’t already have an LLC, you’ll need to create one.
- You’ll need to secure financing for the property through the LLC rather than in your name. Apply for a mortgage or try to get a loan through the LLC’s bank account.
- Find a property that goes well with your investment goals.
- When you find a property you’re interested in, you can make an offer through your LLC. Your real estate agent will assist you with preparing and submitting the offer.
- If your offer is accepted, you’ll enter into a purchase agreement and proceed to closing.
- Now, you’ll be responsible for managing the property. You have other responsibilities also, like: finding tenants, collecting rent, and maintaining the property.
Can I Lease My Property To My LLC?
Yes, you can lease your property to your LLC.
However, the answer might depend upon the assets you want to lease to an LLC and the estate. These can be your office, machinery, vehicles, building space, and others.
Do not forget to ensure that the terms of the lease agreement are fair and well-documented. You also have to follow the self-rental rules well before making any decision.
It is recommended to consult with a legal or real estate professional to help you draft an agreement that is legally binding and beneficial for both parties.
Wrap Up
If you’re wondering, “Can I live in a house owned by my LLC?” rest assured, it’s completely legal. However, transparency is vital in any arrangement involving living in a property owned by your LLC.
This transparency serves to safeguard both your assets and your company’s interests. While the advantages of using an LLC to purchase a house are significant, it’s equally important to carefully weigh the potential disadvantages
Key Points
- You can purchase a house with an LLC and rent it out to yourself.
- Living in a house that is LLc-owned will bring out tax benefits.
- You can enjoy an extra layer of protection while buying a house with an LLC.
- You should be aware of any tax implications of using a property owned by your LLC.
- You should carefully document any agreement or arrangement between yourself as an individual and your LLC.
- You have to pay rent while living on your LLC-owned property. It is for maintaining LLC policies.
Frequently Asked Questions
Yes, an LLC in one state can own property in another state. However, it is important for the LLC to comply with the laws and regulations of the state in which the property is located and to properly register and maintain the property ownership in that state.
No, living in an LLC (limited liability company) property without paying rent is prohibited. It will be considered as trespassing or unlawful occupation of the property. They would typically violate the terms of the agreement and could face legal consequences.
No, transferring your house to an LLC will not entirely affect the property taxation. Taxation of properties depends upon the real value of your property.
