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Can my LLC buy my house?

If you are considering buying a property and want to protect your current assets, the question ‘Can my LLC buy my house?’ is a very reasonable one. 

Are you planning to use an LLC to buy your first house hacking property? Don’t take the leap until you read our free House hacking Quick Start Guide. The robust resource will deepen your understanding of house hacking and shed light on cost-saving tips to help you maximize this alternative lifestyle strategy. 

Let’s take a closer look at whether or not an LLC can buy your house. 

Can my LLC buy my house?

The short answer is yes. 

An LLC – Limited Liability Company – offers many legal advantages to the owner. Most importantly, an LLC can provide protection for your personal assets. This is the primary reason that many consider buying a house with their LLC. 

An LLC can buy a real property asset, including your home, in some cases. However, not all LLCs are able to buy real property. 

You’ll need to ensure that your LLC’s articles of incorporation allow the entity to purchase real property assets. If the ability to buy real property assets is outlined in the articles of incorporation for an LLC, then the legal entity that is your LLC will be able to buy a house. 

Can I create an LLC to buy my own house?

Yes. You can create an LLC to purchase your own house. In order to do so, you’ll need to ensure the article of incorporation allows for the LLC to buy real property assets. 

If you want to create an LLC, then you’ll need to complete a paperwork process. Here are the steps you'll need to take:

Depending on your state, you may run into additional requirements. If you are unsure about the process, consider talking to a legal professional to streamline the process. Additionally, discussing your tax obligations in relation to the LLC with a CPA could be a good idea.

Should I buy my house through an LLC?

Although you can create an LLC with the specific intention of purchasing a home, it may or may not be the right move.  Here are some of the advantages and disadvantages to be aware of. 

Advantages of buying my house through an LLC

The major benefit of buying a home through an LLC is the asset protection an LLC can provide. The idea is that if someone ever sued for an incident that happened on the property, they would have to sue the LLC. With that, the lawsuit wouldn’t touch your other personal assets. Instead, it could only affect the assets held by the LLC itself. 

Although the biggest advantage is to provide legal protection for your assets, buying a home through an LLC can provide other benefits. A few include shrouding your address from the prying eyes combing through public records. 

If you are house hacking, an LLC might provide helpful protections. Learn more about the life-changing strategy of house hacking in our free House Hacking Quick Start Guide. 

Disadvantages of buying my house through an LLC

As with most financial decisions, there are some drawbacks to purchasing your home through an LLC. 

The most notable include that you could lose access to tax protections of homesteading and miss out on attractive owner financing options. 

First, losing your tax protections as a homestead can lead to more dramatic consequences in different parts of the country. Depending on where you live, losing this tax protection could cost you thousands each year. 

Second, losing out on attractive owner financing opportunities could limit your homeownership options. A few of the most attractive home loans include the VA, FHA, and USDA loans. However, you’ll need to move forward as an individual to access these low-down payment options. Additionally, individual homeowners may have access to better interest rates which could cost thousands over the lifetime of the loan. 

Another factor to consider is the management costs of running an LLC. Unfortatuenly, the administrative costs of running an LLC can add up quickly. Depending on your home state, you might face hundreds of dollars in filing fees each year. All of these additional costs will eat into your budget. 

Finally, the protection offered by an LLC owning your home may not be a flawless plan to protect your home. In fact, creditors could seize an LLC in certain situations which would effectively eliminate any protections you hoped to gain from buying a home through an LLC.

In the end, it comes down to your goals. You’ll have to decide for yourself if the pros outweigh the cons. 

Why would an LLC buy a house?

An LLC may be the appropriate option in certain circumstances. In general, this strategy makes more sense for rental properties. 

With rental properties tucked into an LLC, there are some protections to shield your personal assets. However, there are also some additional business costs to keep in mind. The costs of maintaining the LLC could cut into your profits. 

You’ll have to decide how much the protection of an LLC is worth to you. Another option is to purchase a robust umbrella insurance policy to protect yourself in the event of a lawsuit surrounding a rental property. 

Want to learn more about the ins and outs of real estate investing? Take a look at our comprehensive guide to investing in real estate as a beginner

The bottom line

Can my LLC buy a house? Although the answer is yes, it may not be the best option for your financial future. 

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