primary home owned by SMLLC?
For asset protection it was suggested that the title of our primary home be transfered to--name removed--single member LLC. The LLC being owned by our revocable living trust. Would we lose our $500,000 capital gains exclusions if we do this?
1 Answer from Attorneys
Re: primary home owned by SMLLC?
First, a single member limited liability company may not be the best protection. Charging Orders, which would be a requirement of most multimember LLCs, is not a requirement for single member LLCs. Also, many states have tenancy by the entireties ownership for residences owned by married couples. (For example, the deed might say "John Simth and Jane Smith, Husband and Wife.") This only allows a creditor a non-possessory interest while both spouses are alive.
Secondly, the transfer of the property to the LLC would result in a carryover basis from your spouse. Since the LLC could be a disregarded entiy for tax purposes, you might still qualify for the $250k exemption.
You definitely should check this out with a good tax and business lawyer.
My web site also has more information to help you: www.taxesq.com
I hope this helps!
Ron Cappuccio
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