LLC and First Time Home Buyer
If I decide to setup an LLC to purchase my first home, will I lose all the “first-time home buyer” benefits? E.g., $8,000 Obama tax credit.
If I decide to setup an LLC to purchase my first home, will I lose all the “first-time home buyer” benefits? E.g., $8,000 Obama tax credit.
not sure, but I would guess that you would not forfeit your benefits. a single member llc is usually diregarded as separate for for income tax purposes unless you elect to treat is as a corporation for tax.
when it comes time to sell you will forfeit $250,000 for an individual and $500,000 for a married couple plus you get to keep your purchase price and any renovation costs and you are worried about the 8000 bucks? time to get real!
if you do decide to do llc when you sell you might qualify for a 1031 exchange’
If you plan on occupying it don’t do the LLC setup. You will have a tough time obtaining a mortgage and I don’t think that you will get the Obama credit as the corporation will be purchasing the property not you the individual.
I still don’t understand why people are obsessed with the LLC setup. It protects your personal assets if one of your tenants sues you the landlord but that’s about it from my understanding. If you buy commercial property than yes the LLC is the way to go and most banks require it.
Most residential loans will require a personal guarantee even if you buy the property in the LLC so if your defaulted on the mortgage you would still be held liable if that’s what you are trying to accomplish.
Maybe the best question to ask is, “Why do you want to use an LLC to buy your first home?”
What kind of home is it? And why do you want to do it as an LLC and not personal?
You could buy it and transfer it to an LLC I suppose, but it really depends on the building (transfer fees, legalities with the wording of your mortgage, insurance, etc).
I’m not sure of the benefits of an owner occupied 1 or 2 family being held as an LLC A 5+ unit building, which is what an LLC is great for, doesn’t qualify for the credit (as far as I know).
What about if one buys it and then transfer it to the LLC?
I believe yes.
In addition, if you buy anything 4 family and below as an LLC you’re mortgage rate is probably going to be a lot worse than if you did it without the LLC.
I have an LLC but just bought a 4 family as an individual because there were almost 2 full percentage points difference on the loan (just over 5 personal versus just over 7% as LLC)
If it’s a “commercial” property it wont matter any way around. Don’t believe “commercial” (5 units and up and/or mix-use) properties qualify for the “first time homeowner” credit.
No answer to that particular question here:
http://www.federalhousingtaxcredit.com/2009/faq.php
But they answer a lot of others.
Yes.
I mean, ask a lawyer, but my understanding is … yes.