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Please comment on the following legal structure for home ownership
| Judgmental Hissy Fit | 04/15/25 |
| Aggressive curious sound barrier | 04/15/25 |
| Judgmental Hissy Fit | 04/15/25 |
| bespoke toaster center | 04/15/25 |
| Judgmental Hissy Fit | 04/15/25 |
| Balding Point Hominid | 04/15/25 |
| Judgmental Hissy Fit | 04/15/25 |
| Balding Point Hominid | 04/15/25 |
| Judgmental Hissy Fit | 04/15/25 |
Poast new message in this thread
Date: April 15th, 2025 11:54 AM Author: Judgmental Hissy Fit buy home.
form llc. llc owners man + wife + parents helping with downpayment.
form rental agreement, live in home, pay rent to llc ownership, use management company to pay associated expenses.
llc ownership can deduct all the home expenses that would otherwise not be deductible if one owned home in a trust, including depreciation (cost segregation), given it is a rental property.
down the road parents gift their interest in the llc to the husband and wife (would this trigger treatment of the house as a personal residence? would it be retroactive, i.e. would the depreciation and other writeoffs have to be recaptured?)
shrewd or decadent?
not sure how it would be treated under an audit. |
Date: April 15th, 2025 11:56 AM Author: Aggressive curious sound barrier Depending on the state I assume you're losing out on homestead tax incentives, but if this outweighs that then I guess it's good IDK. Register a New Mexico or Montana LLC so ppl can't look you up as easily too. (http://www.autoadmit.com/thread.php?thread_id=5710896&forum_id=2#48849207) |
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Date: April 15th, 2025 11:57 AM Author: Judgmental Hissy Fit yes, the tax-exempt 500k of profits if it were held in a trust would not be applicable under this structure, i think. but the idea is to treat this as a foreverhome. (http://www.autoadmit.com/thread.php?thread_id=5710896&forum_id=2#48849213) |
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Date: April 15th, 2025 12:00 PM Author: bespoke toaster center (lawyer) (http://www.autoadmit.com/thread.php?thread_id=5710896&forum_id=2#48849233) |
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Date: April 15th, 2025 12:11 PM Author: Judgmental Hissy Fit This used to be a law board, now everyone is useless (http://www.autoadmit.com/thread.php?thread_id=5710896&forum_id=2#48849284) |
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Date: April 15th, 2025 12:18 PM Author: Balding Point Hominid you're going to have to report your profits from your membership share of the LLC. That's kind of a big red flag. You own the LLC that is claiming rental property deductions and live in the subject house and pay rent to the LLC. It's obviously not an arms-length transaction that's necessary to support the tax treatment you're seeking.
Also if it's in the LLC's name don't you lose primary residence deductions like state and local taxes? Also you lose the exemption from capital gains for primary residences (about 500k for a married couple). |
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Date: April 15th, 2025 12:22 PM Author: Judgmental Hissy Fit Thanks, this is the kind of advice I was hoping for.
I just know of others that have done this structure and they have not been penalized for it (yet).
Yes, the primary residence deductions are capped at 10k a year though, no? The deductions for home expenses plus cost seg would be way, way more than that. I’m not too worried about losing the capital gains exemption as this is hopefully a forever home. |
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Date: April 15th, 2025 12:29 PM Author: Balding Point Hominid I mean no one is being penalized for anything because the IRS is completely shorthanded. We all vastly overstate our donations. (http://www.autoadmit.com/thread.php?thread_id=5710896&forum_id=2#48849342) |
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Date: April 15th, 2025 12:30 PM Author: Judgmental Hissy Fit (http://www.autoadmit.com/thread.php?thread_id=5710896&forum_id=2#48849344) |