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Updated about 2 years ago on . Most recent reply
Do we have to pay rent to live in an llc property we co-own
My husband and I own a house with my son and daughter-in-law. It's in an LLC . We plan to do MTR to visiting nurses for half of the year while we travel and rent one room out to a visiting nurse during the six months that we are there. Do we have to pay rent to the LLC for the months we live there?
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Quote from @Judy Jacobs:
My husband and I own a house with my son and daughter-in-law. It's in an LLC . We plan to do MTR to visiting nurses for half of the year while we travel and rent one room out to a visiting nurse during the six months that we are there. Do we have to pay rent to the LLC for the months we live there?
I am not an attorney or an accountant, so I would say that you will likely need to consult them on this issue. But here are just a couple of thoughts I have.
- Is your LLC on the loan for the property? I believe most lenders that lend to LLC's on investments have something saying it can not be your personal residence. So maybe double check this?
- Not sure the legal/tax implications for this if you are living at the property not paying rent. You might be intentionally creating a business loss on the taxes that might run the risk of getting an Audit?
- I would think the most appropriate way to do this, if the LLC owns the property and is on the loan, is for you to pay a "fair" rent to your LLC with a lease in place basically giving you permission to sub-lease the property when you are not staying there. That way you are putting some separation between your personal assets and activities from the LLC's. Have heard of some LLC's being worthless for asset protection if you intermingle personal and business finances. If the loan is in yall's personal names and LLC is just on the deed, then I think maybe it's not as big of an issue since the mortgage is likely listed under a personal residence. Only hesitation would be how is your son and daughter-in-law tied to this when there is less cash flow when yall are living there.