LLC for Primary Residence rented on Airbnb?

[Jerome Maisch]

Hi All! My wife and I are buying a primary residence in NY state (single-family in Dutchess County) and want to rent it as a short-term rental (Aribnb/ vrbo/ etc.) while traveling (more than 90 days/year). Would you advise for an LLC even though we'll be living there for more than half the year?

Typically, an LLC would protect us from a liability perspective but risks to hinder our tax deductions. We've also thought about approaching the liability issue with an umbrella insurance or short-term rental insurance. Also, would an LLC be actually considered as misuse of corporate assets?

Eventually, we are thinking about buying rental properties under an LLC set-up with a parent structure that is TBD.

This is at the crossroad of legal, tax accounting and insurance and it has been hard to find an answer. So any help's welcome! 

[Robert Gilstrap]

Guess I'm going to be the lone voice of dissent here...

1. You should never own anything in your own personal name ever in my opinion, especially real property. If you don't own it then someone can't take it. 

2. Thinking that insurance will protect you exclusively is naive and very risky.  Insurance is just one part of risk management and asset protection. Yes you should have it but I would never rely exclusively on it.

Just food for thought but a great avenue that addresses your concerns would be to own the property in a revocable trust with an LLC holding beneficial interest in the trust and you and your wife are members of the LLC. Almost no lenders would ever loan in the name of a trust so you will buy in your name then transfer to a trust after closing. If the borrower is a beneficiary to the trust then the Garn-St. Germain Act prevents the bank from invoking the due on sale clause simply for transferring into a trust. Since trusts are not filed anywhere on public record then one could change the beneficiary at will from you to an LLC or vice versa.