[Jessica]

Can you transfer a home you lived in for 2 years to an LLC (no mortgage) and rent it out for 2-3 years and then transfer it back to your name sell it and avoid capital gains because you lived in it for 2 years in the last 5?

I am considering renting my home but am nervous about the liability if I keep it in my name.

What are you thoughts and recommendations?

[Dita]

Just wanted to share that I have 10 units of rentals and not doing an LLC.

I took a $1M umbrella insurance. It’s only $200ish a year.

Have been like this since 2020.

Would your numbers make sense if you were to rent it out?

Being a landlord is no fun.

Having 10 units balances each other out in case I do have to evict a tenant or two due to non payment

[KC Kline]

Question: if you had the equity proceeds in cash, would your plan be to buy a single rental property?

What does that do to your portfolio composition?

Would you be significantly overweight now in a single asset? What will the cap rate and net operating income be?

Cash on equity return?

You have no leverage so you will likely get below historical average equity returns for significantly more risk.

You are likely experiencing the endowment effect and divestiture aversion.

The rewards of renting for 2 years are often much less than the risk.

Rent for 3 years and you’ve lost CG exclusion.

Selling a property is a process.

Being a landlord is not fun, and prepare to spend a chunk of the rents you collect for two years to repair and prepare the property to be sold.

Also, there is no guarantee significant appreciation happens over the next two years.

[Adam]

Another option could just be a larger umbrella policy which is likely cheaper than creating the LLC and doing a quit claim deed to title it into the LLC and then another one to title it out of the LLC before you sell

[Anthony]

Plus or minus, yes, you can do that and still sell later and not have any gains based on what you said.

Unless you elect to be taxed differently, an LLC is a pass through entity and doesn’t change your tax liability.

[Author]

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