Renting from yourself

[Jonathan Jaffe]

Dear BP Family:

I'm thinking of trying a 'House Hack' using my own future primary residence. I have a foreclosure option that can be purchased cash and then potentially refinanced into an LLC.

Has anyone ever thought about if there are any tax advantages to the following:

Buy the foreclosure personally (say Spouse owns the property in name), fix up (sounds like BRRRR), then rent to the other spouse. Everyone lives in the house, while rent is paid to the "owner" spouse.

Alternatively, personally buy the property, then sell/transfer into LLC then live in the 'rental property' paying rent to the LLC?

Does this make any financial sense from a tax standpoint? Does the LLC still qualify for all the same real estate tax advantages as other rental properties?

Thank you!

[Stone Jin]

I think from the tax standpoint nothing will change as your LLC will likely be a passthrough. However what's the point of documenting the rent to oneself? Are you looking to have the rent count as income so it doesn't lower your DTI? The money is going from left pocket to right pocket, I'm not sure I see the advantage of doing this.