Tax consequences of transfer a house to LLC and rent it

[Chad Coleman]

I have lived in a house for 4 years and moved recently to a different house. Was thinking to transfer the old house to and LLC and rent it out. I think since I have lived in the house for full 4 years, there will be no capital gain taxes but my question what if I want to sell after I transfer the house to LLC and use it as a rental property? Am I gonna lose this advantage and will be taxed captain again at the time of sale? Thanks

[Steve Vaughan]

Quote from @Chad Coleman:

@Steve Vaughan

Thanks, I really don’t know yet when I am gonna sell but possible after a year or two or even three like you said if the market bounces back.

So, just to clarify that I understood correctly, don't risk it means not to transfer to LLC, is this correct? So if I kept it under my name and rent it out, is this also would impact the 121 exclusion? I am guessing here if I still meet the requirements which is living there 2 years in the last 5 years. So I guess it won't matter if kept the house as a rental after the 3 years and would lose this advantage regardless.

For the insurance, I think I understand to have landlord policy, would it help to add an umbrella policy too? Or the landlord policy is enough?

Thanks again for your inputs! Really appreciate it

I wouldn't risk the tax benefits at sale by quitclaiming into an LLC. Could also mess up your title insurance.
An umbrella policy is up to you.  I dropped mine after selling riskier mf assets and my son got a car in his own name. I'm down to 5 smalls that don't worry me. 

For tax free gain at sale you have to have occupied your home for 2 of the previous 5 years so sell within 3 years of renting out or hold forever basically.