Alpharetta, GA asked in Business Law, Real Estate Law, Tax Law and Landlord - Tenant for Georgia

Q: Can I transfer a primary residence to my LLC and rent my house from myself, to pay R&M and Capital expenses through LLC?

I own a home in Alpharetta, GA, I believe transferring ownership from myself to an LLC I own would allow the LLC to expense mortgage payments and Repairs & Maintenance costs as a cost of maintaining the property for tenants. I also believe the LLC could capitalize costs related to capital improvements in the house. Furthermore the interest expense paid on the mortgage would be transferred to the LLC allowing me to take the standard deduction at tax time and the LLC to expense the interest.

Please advise me on the legality of such an action and the tax effects of doing so.

1 Lawyer Answer
D. Mathew Blackburn
D. Mathew Blackburn
Answered
  • Tax Law Lawyer
  • Englewood, CO

A: Yes you technically can, but it doesn't work. You end up netting if it works out well and you have to defend it in an audit. It always ends up being net taxable when the IRS recalculates the FMV of the rental.

Once you run all the numbers it's comes out that you create tax out of thin air.

I would hire someone to run those numbers and advise you. I'm just saying that in the past I've seen this and it did not go well.

Best of luck.

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