Can I Sell My House To My LLC? : Things To Consider in 2024

Can I Sell My House To My LLC? : Things To Consider in 2024

You know that LLC can give you bunches of facilities from carrying the cost of business to protect you from double taxation. What you do not know is smart playing with this business entity. You can even save up your primary residence by selling it to an LLC. Here is where I get so many questions asking “Can I sell my house to my LLC?”

By selling your house to an LLC, you can get management flexibility, financial protection, and privacy for your assets. If you are opting to sell the house to LLc, there is a certain procedure to follow. You must follow the state’s rules and regulations to avoid future legal troubles.

Here I am, your guide with every detail you must know about selling your primary residence to your LLC. 

If you are wondering “Can I sell my home to my LLC”, The answer is YES. It is legally acceptable in most of the states. 

Managing two or more houses and finding it difficult to maintain financially, an LLC can help. You can sell the house to your LLC and show it as a rental property. This is an incredible trick to enjoy the legal benefits of your LLC. 

It is legal to sell your house to your LLC. But remember, there is a specific procedure for that. You can check IRS topic 701 to learn more about selling your house to LLC.

Your sale to the LLC should qualify for exclusion from capital gains. However, the LLC would incur applicable capital gains when it sells the asset at some point in the future.

Your insurance costs might stand slightly higher. These are considered as an LLC business expense. This higher cost will not make any major impact as it is a marginal cost.

Why Should I Sell My House To My LLC?

There are a bunch of things that will attract you to sell your house into an LLC. Give a quick check on these pull factors of selling the house to an LLC:

  • While selling the house, you will get support from a tax professional or real estate agent.
  • Selling your house to your LLC can allow you to take advantage of certain tax benefits, such as deductions for expenses related to the property and potentially lower tax rates for business income.
  • Holding your house within an LLC can help limit your personal liability in case of accidents or other issues on the property. 
  • By moving out, you will be able to deduct mortgage interest as a tax credit.
  • Selling your house to your LLC can be part of a larger estate planning strategy. If you are a real estate agent, it can help you to generate profits for the business.

Why You Should Not Sell Your Home To Your LLC?

Well, many do not find mixing personal assets with business assets together. This incorporates several threats as asset injuries and business related legal threats. 

You might lose your personal assets because of a business clash. 

Some limited company mortgage lenders may only provide loans to individuals using the property for investment purposes. Securing a loan for residential use may be challenging in this situation.

With LLC, you get an illusion of complete privacy. It is not possible with rental properties. If personal grants and loans are fraudulent, LLC can help you be legally responsible for the business asset loss.

You have to pay a few more bucks to maintain the LLC. 

Overall, if you do not know the legal procedure to maintain your sold house into an LLC, this might bring you a tough time.

How To Sell My House To My LLC?

Before you opt for the procedure, maintain a few things:

  • Assure yourself that the LLC you are owning by the company is dedicated to its sole purpose. It should be registered as SPV (Special Purpose Vehicle). Such types of LLCs aim at property investment. 
  • Now, fix a fair market value for the value. Your LLC should have enough funds to initiate any sale. 
  • You should clear all the taxation requirements by the state. This can include redemption charges, legal fees, and others.
  • Now, transfer your house to an LLC. This will require you to use a quitclaim and warranty deed. A quitclaim is dependent in the case of property transformation in related properties. On the other hand, you can use it for warranty deeds in case of using unrelated parties.

Note: Well, this process is not applicable to your mortgaged house.  You have to maintain other ways to put your rental properties into an LLC.

Considerations When Transferring Property to an LLC

Transferring your personal property into an LLC is a big decision. You can not do it randomly. Just give here a quick check and know where to put your concentration on:

  • Before transferring property to an LLC, it is important to consider the legal and tax implications. Each statute might require different documents and filing fees. Consult with a legal and tax professional to ensure that the transfer is done correctly and in compliance with local laws and regulations.
  • consider how the transfer of property to an LLC will impact the management and control of the property. Make sure that the operating agreement of the LLC clearly outlines the roles and responsibilities of members and managers.
  • Make sure to maintain accurate records of the transfer of property to the LLC and comply with any reporting requirements or filings that may be necessary.
  • Consider your long-term goals for the property and how to transfer it to an LLC. It should fit into your overall estate and financial planning strategy.

Wrap Up

It is legal to sell your house into an LLC. But this is not the ending. You must consider the pros and cons before making any decision. After All, it will be a big decision both for your business and the house. Whether you should sell your property to an LLC will be dampened upon a few things. Do your cost-benefit analysis and get professional help.

Key Points

  • It is legal to sell your house to your LLC
  • With selling your house, you can get legal help by the LLC.
  • You will get to limit personal liability and safeguard your assets from business threats
  • it is important to consult with a legal and financial advisor before making any decisions 
  • The selling price should be based on the current market value of the property
  • The selling price should be determined by an appraisal or comparative market analysis.
  • Whether you should sell your house to an LLC depends upon your choice.

Frequently Asked Questions

Can an LLC avoid capital gains tax?

Yes, capital gain taxes are not applicable to personal properties that are registered under an LLC. Any capital gains realized by the LLC will generally be passed through to the individual owners. Taxation will be done at their personal income tax.

Can I sell my house to my LLC and rent it back to myself?

Yes, you can sell your house to your own company and rent it back to yourself. This will help you with loan qualification and taxation. You can use the rent as an expense for the business purpose. But ultimately it will be your income.

Does LLC income count as personal income?

LLC income typically does not count as personal income for tax purposes. It is more likely a business income. LLCs are considered pass-through entities. It means  that the income generated by the business is passed through to the individual owners

Alex Johnson is a seasoned author specializing in LLC formation intricacies. With a wealth of expertise, he navigates the complexities of Limited Liability Companies (LLCs) adeptly. Through Best Company Formation, his insightful guidance demystifies LLC creation, offering invaluable advice on costs and crucial aspects.


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