Title for Duplex: Personal names or LLC when planning to live in one side?

[Nicholas Clayton]

Hi BP, 

First post here after lurking for quite a while. 

I am currently buying my third duplex with my partner here in Colorado.  Each time on the first two I have bought in my name, renovated one side while living in the other, swapped sides renovating while living in the other, then rented out both sides when moving on to the next project. I started this in 2020 and have lived at each duplex for 2 years. I understand I get the capital gains exemption for the side I lived in (i.e. 1/2 of the building's appreciation), but am becoming more inclined to just miss out on that and hold on to the first one I bought. As such, I'd let the "2 years in the last 5 years" rule lapse given the low interest rate I got on the first and how well it is cash flowing.

And the second duplex hasn't appreciated sufficiently to take advantage of the capital gains exemption yet, so planning to hold for the next few years.

For this third duplex, however, I would like guidance on how to title it:

1) Given that I am paying cash, and I am not totally sure I will sell this within the "2 years in the last 5 years" rule, should I just put it in a LLC rather than my personal name (thereby missing out on the gains exemption)? Or does the option of selling and getting that capital gains exemption outweigh the liability benefit of the LLC? I'd do a landlord insurance policy and umbrella policy regardless.

2) I may cash out refi the second and third duplex (both bought in cash) if/when interest rates drop to buy my dream home in the next few years. Given that, should I go the LLC or Personal name(s) route?

Thanks for your help!