What’s the advantages of putting my personal residence into my LLC? My first mortgage is paid off, with a HELOC against it.
If my HELOC has no balance, would I be able to attain a credit line for my LLC? Would the LLC’s line of credit be secured by the property?
What's the advantages of putting my personal residence into my LLC?
Not much. Unless you are willing to become a tenant and pay rent, the LLC has no justified business purpose for owning the property. Some additional expenses then become deductible, but you lose flexibility. Generally your primary residence is pretty secure from creditors already; you don’t gain much extra protection from putting it inside an LLC, other than anonymity like with a trust. Having it encumbered (HELOC) is a good idea, even if the balance is zero a “fishing” atty will only see that there is a lien against it and hopefully move on.
If you no longer own the property, you cannot personally encumber it with a HELOC. The LLC can obtain various types of financing by using the property as collateral, but probably on worse terms than you could personally. On the other hand, you can get a personal HELOC and use the proceeds as you wish, including loaning them to the LLC for investments.
Having the residence owned by the LLC exposes it to any risk that arises at other properties owned by the same LLC. That’s a big risk to take with your home.
basically, there’s no advantage to that…if you’re interested in privacy - i’d talk with a lawyer.
I agree with Mark and TMCG…
LLCs are a great tool. But that doesn’t mean it’s always going to be what you should pull out of the box in every real estate situation.
You should own your home and all real estate in seperate land trusts.
From an estate planning perspective, putting your primary residence into a family LLC may facilitate wealth transfer and avoid probate.
You lose homestead exemption for property tax, bankruptcy, and judgements. A properly structured qualified personal residence trust is a much better solution.