In these litigious times, you might want to protect your home from legal judgments. Otherwise, someone could trip on your pavement, sue you for “pain and suffering,” and wind up being awarded your house.
One strategy to prevent this is to transfer your home into a single-member limited liability company (LLC). Such entities can protect your house from creditors.
The Treasury Department has announced that such an LLC will be disregarded for income tax purposes. Thus, homeowners who make such transfers will be entitled to the mortgage interest deduction and capital gain exclusion on sale of a principal residence. Until regulations were issued by the government, those tax breaks were in doubt for homes owned by an LLC.
There can be only one owner, which could be you and your spouse, holding title as joint tenants or community property owners. No additional business tax return need be filed.
