Legal Accessory Apartment Loopholes

[Account Closed]

Hello BP!

I posted this over in Tax/Legal issues, but am moving it here.

My wife and I are currently in a property in Pleasant Grove, Utah. We have a legal accessory apartment that we currently rent out, however, as far as I can tell, we would be in violation of the zoning commission if we were to move and rent the main section as well. My question is are there any loopholes that anyone has seen to get around laws such as this? I spoke with an agent who mentioned that they'd heard of investors transferring the ownership into an LLC and issuing a small amount of stock and gifting it to the tenant, such that they are legally part owners, has anyone seen this done successfully? Any other ideas?

Thanks in advanced!

Kyle

[Jeremiah Maughan]

First off, glad your accessory is legal. That's the biggest hurdle.  Most of the cities are getting pretty good at closing loopholes though so don't plan on doing it as a true duplex.  Provo for example, actually defines an owner occupant as having at least 50% or greater than 50% ownership because landlords used to do the ownership thing back in the day.

The best "loophole" is to rent it to one large/extended family.  That doesn't always work (cousins don't count in Provo), but the best way to use an accessory apartment as a duplex is to rent it to a single family and their relatives.  We've had a number of situations like yours where we rented it to a family, and then the accessory was occupied by a married adult son/daughter and their spouse.  You can charge very nearly what you could get for a fully recognized duplex in those cases.