Renting 2 rooms in my home

[Chris Mora]

Hi BP,

I recently purchased my first home and moved out of my parents house. I'm renting out two of the bedrooms and wanted to see if you all could help me determine if its beneficial to put the leases and check payments coming in under an LLC.

The LLC is already created and functioning- essentially my idea is that it would work like an operating company for the two rooms I'm renting out and I could put some of my expenses through there with pre-tax dollars. Does that make sense? Can the LLC pay my mortgage? I'm unsure of what the structure should look like given that I'm living in one of the rooms myself.

All comments are welcomed. 

[Anthony Atyeo]

Hi Chris,

I am not an expert and hopefully someone with more experience can chime in. I do have a degree in accounting so maybe I can be somewhat useful. Your concept is interesting, but I am not sure if you can have the LLC own part of your house. If you can it sounds like an accounting headache and will likely put you at greater risk for being audited. I believe you can have the LLC own the whole house even though you live there. One down side to that approach is an LLC will have to pay capital gains tax, if you have any, where a primary residence is not subject to capital gains tax up to a point.