| by Kenneth Chase | 28 comments

Can I use an LLC for My Personal Residence? (pros and cons)


Hey folks, Matt Horwitz, LLCUniversity.com. Hope you’re doing well. Can I use an LLC for my personal residence? One of our readers writes in: “Hi, the personal
assets I have are our bank accounts, a house, and brokerage accounts. How can I protect that from lawsuits if someone
gets hurt on my property? Thanks, Gary.” Alright, here’s the answer Gary. First, I recommend reviewing your insurance
policies. That’s going to provide some coverage in the
event of a lawsuit. Second, to get the full liability protection,
you’re going to need to transfer your house to the LLC. The LLC must own the property in order for
it to provide personal asset protection. Just having your house, which is owned by
you, and a separate LLC; that does not create any asset protection. “I created an offer protection…” I just noticed a typo in our on our page. I’ve made another video on this which goes
into far more details. I’ll link that below. In your case Gary, since you already own the
property in your personal name, again, you’re gonna to need to transfer the house from your
name to the name of your LLC. Think of it as a basically a sale of a property,
but instead of selling it to somebody else, you are going to transfer it (or sell it)
for a dollar from yourself to your LLC. You’re going to need to contact a real estate
title company to see how to transfer the deed. It’ll most likely be what’s called a dollar
deed or a dollar sale. There’s different types of deeds, depending
on your county, city, state, etc. But here are some things to keep in mind. You’re likely going to incur a transfer tax. A real estate transfer tax because of the
sale of the property. Now, sometimes that tax is greatly reduced
when you are transferring it in the dollar sale, the dollar deed, but please, you need
to check on that. If you have a mortgage, that could prevent
the sale or the transfer in this case. More on that in just a second. And you’ll likely need to re-register all
of your utilities. You basically need to kind of re-register
everything that’s owning your personal name that’s associated with the property into the
name of the LLC, so that LLC owns that asset and everything that is encompassed in that
business. And you’ll likely need to get new insurance
because your existing homeowners insurance policies are in your personal name and they’re
not in the LLC. And if you’re getting insurance in the name
of the LLC, it most likely is not going to be a homeowner’s policy, but do check with
your insurance carrier or broker to double-check on that as the variation… as there’s a lot
of variation than that area. So here’s your recommended action list. Number one, call a title company to check
on transfer tax, any miscellaneous closing costs, fees, and what actually needs to happen. You should also contact your tax professional
to ensure there’s no negative tax consequences of this. I don’t know your exact situation, but something
like this, people just think, “Oh, just form an LLC and that’ll protects my assets.” No, that’s that’s definitely not the case,
especially with real estate and there’s just so much detail involved here, definitely check
with your tax professional make sure… I’m repeating myself. Anyway, check with your tax professional. And you also want to review your mortgage. If you’re not sure you can just call your
your broker, your banker, or ideally wherever the the loan is, because you may have what’s
called a “due on sale” clause. What that means is that if you purchased a
property that has a mortgage and you sell it, it immediately causes in the mortgage
“due on sale”, which means basically the balance of the mortgage becomes due as soon as you
sell the property, so that’s a big no-no you want to check on that. Again, read your mortgage or call the bank. And on top of asking about the “due on sale”
clause, I would also check with your bank about just, “Hey, here’s what I want to do. I want to transfer from my name to my LLC.” All banks operate differently… different,
all the states are different, cities, counties, etc. And if you’re not a 100% sure of any of this,
I would definitely contact a local lawyer. So that’s your answer to “Can I use an LLC
for my personal residence.” And if you’re watching this video before you
bought any real estate or any property, you want to form the LLC before you purchase your
home… for the LLC before you purchase a real estate, so that when you’re buying the
real estate, it’s not you, it’s the LLC buys the real estate. Alright, I hope this video is helpful for
you.

28 Comments

Heart Healthy Hustle by Jonathan Frederick

Sep 9, 2017, 2:19 am Reply

Another helpful video. Thank you! Hey do you have a business email? I have a podcast I'd love to interview you on!

Donovan Green

Oct 10, 2017, 1:58 pm Reply

How to apply for llc

Erika Quesada

Feb 2, 2018, 7:02 am Reply

Hi, I need to have a resale number to buy and sale ? Do I need a LLC ? And my business is from my house so what do I need ? Thank you 🙏

Colby Chase

Mar 3, 2018, 5:11 pm Reply

Hi, I'm thinking or starting an LLC, but I don't own property and rent a room from someone. When filing the paper work for the LLC, can I use the address of the property I rent the room from? Or will I need a more permanent address, like a relatives address?
-Thanks

polyverse1

Mar 3, 2018, 4:49 pm Reply

A mortgage will not impede a llc transfer you will have to do a quit claim deed and records the interest and the transfer mortgage to the llc

B K

May 5, 2018, 2:46 am Reply

If i have an llc should the address & phone # differ from my home?

B K

May 5, 2018, 12:45 am Reply

Thanks for the reply. Would that be true also if I am trying to avoid piercing the corporate veil? Are would I need to use a different address and phone number?

Amon Smith

Jun 6, 2018, 9:01 pm Reply

Can you used a virtual office for llc and holding company?

Ahpretty Lady

Jun 6, 2018, 8:21 am Reply

What about people who work out of their homes? Or want to buy a home to work out of? Im an IBO,so how does this apply to me?

Lvis M

Jul 7, 2018, 2:58 am Reply

If I have a 20yr left loan in the property. Can I transfer to my LLC and Can I make repairs to my house under that LLC, since I plan to rent my house in the future. Thanks

Fly HIGH

Aug 8, 2018, 3:37 pm Reply

so i know that LLC protects our private assets it seperates the private assets and business, but what if i use my Home adress same as my LLC. will my house be protected if someone sues me or will it not because i use it as my business adress?

Mr R

Aug 8, 2018, 2:08 am Reply

Do LLCs have to pay quartly taxes? I'm currently in the process of becoming a self employed certified personal trainer.

Musa I of Mali

Aug 8, 2018, 9:58 pm Reply

…but don't people usually keep personal property separate from the LLC so that they won't have to give it up in case of an issue that might arise with the company? I mean if your company gets sued of goes bankrupt won't you lose your personal home? Isn't that the reason why we create the LLC.. so your personal assets will be separate?

LLC University

Sep 9, 2018, 11:25 pm Reply

Hey folks, make sure to check the site for most up-to-date information: https://www.llcuniversity.com/llc-for-a-personal-residence-i-already-own/. Or select your state and start forming your LLC with our free guides: https://www.llcuniversity.com/

Hkameleon Music World

Sep 9, 2018, 9:36 pm Reply

what about the tax do i have more advantage to register my record label llc to my wife appartment or is it better to rent an external box mail for my llc address ?

Saif al-Islam

Oct 10, 2018, 2:11 am Reply

What about people who are starting from scratch? What are the pros and cons of having the title deed owned by LLC vs personally.

ShowBizJunkie

Jan 1, 2019, 7:43 am Reply

Which entity is best for first time wholesalers who have not done any deal yet? Can they operate as sole proprietor until they have enough money in their account to make sense to create an LLC

John B

Feb 2, 2019, 6:56 am Reply

Hello,
I am married and planning to purchase my Personal Residence in California under single member LLC. What about the 121 exemption if I purchase it under single member LLC?

John B

Feb 2, 2019, 1:25 am Reply

I live in California and planning to create a Land Trust that I can purchase my personal resident with it. My plan is to establish out of state LLC to put it as a trustee. Which states are you recommending? Delaware, Nevada, New Mexico or Wyoming LLC
or any others with lowest maintenance cost.

Bobbie

Feb 2, 2019, 1:16 am Reply

Hello, I have a question. I would like to start a online retail business and work from home. I live with my boyfriend. He owns the house it’s in his name. Would I have the same worries of someone suing and they take my boyfriends house because I want to list his house as my business address?

Red Apollo

Feb 2, 2019, 12:41 pm Reply

Can you do the same if youre renting?

CSE

May 5, 2019, 8:50 pm Reply

Hi I have a question: I'm planning to open a company in the US (not yet sure if LLC or corporation) as a non-resident. However, this company should be owned by a local corporation here in Switzerland that will exist only in a few months. Is it difficult to change the owner of the company from myself to this other company later? What are the registration fees?

C Platinum

May 5, 2019, 9:57 pm Reply

Very helpful thx for this video

cabreracl

Jun 6, 2019, 9:20 pm Reply

I’m very new to all this but I really want to run a virtual kitchen or kitchen online
What you think about $349 express gold package from legal zoom
Will they get all licenses and permits in California??

JuanFernando Gracia

Jun 6, 2019, 4:52 pm Reply

I hope you still active: I read your article about licenses and you recommend the IncFile package, but I specifically choosed consulting cause I heard it was barely or not regulated at all, so question is: How can I do the research my self? I know I need the business license from delaware revenue division but if that is all I need I don't see why spend 99 dlls on Incfile. To be more specific, I do consulting on strategy to help business grew

Regards

toology55

Jun 6, 2019, 7:52 pm Reply

do you loose homestead exemption?

Insta

Sep 9, 2019, 2:48 am Reply

2019, does your site provide services, ? I cant find any contact info

Anna Huckabee

Sep 9, 2019, 1:01 pm Reply

Can the LLC own the home and I rent it from the LLC? That way any maintenance and repairs are considered business expenses. Or would it already be since the home you live in, wether you rent it or not is owned by the llc?

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