{"id":4055,"date":"2019-11-01T00:07:42","date_gmt":"2019-11-01T00:07:42","guid":{"rendered":"https:\/\/dreamhomefinancing.com\/?p=4055"},"modified":"2024-01-04T02:58:37","modified_gmt":"2024-01-04T07:58:37","slug":"buying-a-house-under-an-llc","status":"publish","type":"post","link":"https:\/\/dreamhomefinancing.com\/buying-a-house-under-an-llc\/","title":{"rendered":"Buying a House Under an LLC in 2024 – Mortgage Options"},"content":{"rendered":"

Buying a house under an LLC<\/strong><\/span><\/h2>\n

\"buying<\/span><\/p>\n

Real estate investors often purchase rental or investment properties under an LLC to protect their personal assets and themselves from liability. However, conventional and government loan programs do not permit an LLC to purchase a primary residence under an LLC.<\/span><\/p>\n

What is an LLC?<\/strong><\/span><\/h2>\n

An LLC (limited liability corporation) is an entity which protects the owner\u2019s personal assets from liabilities related to the business. An LLC also shields other businesses or LLCs from each other.<\/span><\/p>\n

Can I buy a house under an LLC?<\/span>
\n<\/strong><\/span><\/h2>\n

You can buy a house under an LLC and finance it using mortgages offered by portfolio or investment focused mortgage lenders. The LLC will provide you with personal liability protections while also allowing you to enjoy some tax benefits as a business entity. You should seek advice from legal and accounting professionals to understand the pros and cons of buying a house under an LLC before making a final decision.<\/span><\/p>\n

When is it Smart to Buy a House Under an LLC?<\/strong><\/span><\/h3>\n

There are a few instances where it would be smart to buy a house under an LLC. These are just a few examples. Check with an attorney to make sure you are making the right decision for you.<\/span><\/p>\n

You may have multiple investment properties and you would like to shelter your personal assets including your primary residence from being party to a future law suit.<\/span><\/p>\n

You own a business and would like to fold the costs to live in your primary residence into your business expenses.<\/span><\/p>\n

You are trying to keep your name from appearing on the ownership records of the property. Celebrities and others who prefer to remain anonymous purchase their homes under an LLC for this reason.<\/span><\/p>\n

Pros and Cons of Buying a House Under an LLC<\/strong><\/span><\/h2>\n

Pros<\/strong><\/span><\/p>\n

    \n
  • Protects the home owner\u2019s personal assets<\/span><\/li>\n
  • Possible tax exemption benefits<\/span><\/li>\n
  • The home asset can be a benefit the business<\/span><\/li>\n
  • Additional privacy for the homeowner<\/span><\/li>\n<\/ul>\n

    Cons<\/strong><\/span><\/p>\n

      \n
    • Fewer lending options when buying a house under an LLC<\/span><\/li>\n
    • Rates from portfolio lenders may be slightly higher<\/span><\/li>\n
    • It is possible that a larger down payment may be required<\/span><\/li>\n
    • Cannot use conventional or government loans such as FHA<\/span><\/li>\n
    • Potential capital gains impact when the home is sold<\/span><\/li>\n<\/ul>\n

      How to Buy a House Under an LLC<\/strong><\/span><\/h2>\n

      When purchasing a house under an LLC, lenders will require the same documentation that you would provide if you were applying without the LLC as the purchasing entity. However, you will also likely have to provide the following:<\/span><\/p>\n

        \n
      • Certificate of formation detailing your ownership of the LLC<\/span><\/li>\n
      • Operating agreement of the LLC<\/span><\/li>\n
      • Documentation of the income generated by the LLC<\/span><\/li>\n
      • Possibly a current year P&L statement for the LLC<\/span><\/li>\n
      • You may need to do a 1031 tax deferred exchange<\/span><\/li>\n<\/ul>\n

        Your offer to the seller will be the same as if you were buying as an individual. The rest of the home buying process will also be the same. You will have the same contract, appraisal and standard and customary fees associated with the purchase process and financing.<\/span><\/p>\n

        The most difficult part of the buying process is establishing the LLC if you do not have one already and then finding a lender who is willing to originate the loan for you under an LLC.<\/span><\/p>\n