The majority of homeowners purchase their homes in their own names. Most homeowners are unaware that there is the option of purchasing their home through a Limited Liability Company or LLC. A LLC is a business structure that combines pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation. LLCs are not corporations.LLCs provide limited liability to owners.
Purchasing a home through an LLC is beneficial for at least two reasons. First, homeowners maintain privacy because the LLC prevents the buyer’s name from being published in the public record. Property transfers are recorded and are available to anyone who wishes to look up information on a particular property address. Thus, using an LLC to purchase a home gives the homeowner privacy.
Second, purchasing a home through an LLC shields the homeowner from liability in a lawsuit. If a
person is injured on a homeowner’s property, the injured party may sue the homeowner directly. Althoughinsurance may cover a certain amount of money, other assets, such as savings, retirement, and home equity may be used to cover the remaining amount of money owed to the injured party. However, if the home is held in an LLC, then the lawsuit can only name the LLC and only the assets in the LLC can be used to satisfy the amount of money owed in the lawsuit.
Subsequently, if a LLC only had a house, then the house would be the only asset that is used to satisfy the judgment of the lawsuit.
Additionally, there are other benefits of purchasing a home using an LLC. For example, when a property is owned in an LLC, the property taxes are paid through the LLC. Other costs of homeownership can also be funneled through the LLC. It is important to keep in mind that purchasing a home through an LLC will impact your property taxes and future capital gains taxes. Also, each state has different requirements when forming an LLC. For instance, the State of New Jersey has the requirement that the LLC file an annual report during the anniversary month of the LLC’s incorporation; the filing fee is $50.00. To ensure that the requirements are met, one should consult a lawyer and a tax advisor before purchasing a home through an LLC. Contact The J. A. Centanni Law Firm, P.C. at 908-753-0153 for more information about purchasing a home through an LLC.
Jillian A. Centanni, Esq. is the Owner and Founding Member ofThe J. A. Centanni Law Firm, P.C.
Ms. Centanni has a B.S.E. in chemical engineering, an M.B.A. and a J.D. She was recently named to the Super Lawyers® – Rising Star list, a designation given to the top 2.5% of Attorneys licensed in New Jersey who have been practicing law for less than 10 years or are under the age of 40. She is also a Registered Patent Attorney.