Tax Benefits for Primary Residence Owned in an LLC

[Kevin Glover]

I am looking to purchase two properties in the Phoenix area. Both are in the same subdivision and one would be a rental while the other would become my primary residence. For liability purposes, I would like to hold both properties in a corporation. Now, I know that with your primary residence, any equity (up to $250,000 if single) is yours tax-free if you've lived in the home for two of the last five years as your primary residence. Would I still be able to take advantage of this tax benefit if I held my primary residence in an LLC?

[Russell Brazil]

No you would lose that benefit as your LLC would own the property and not you. You would also lose out on your mortgage interest deduction as there would be no income to deduct it against.