Drawbacks mount when owning home in LLC

Q: We are a California limited liability company (LLC) and would like to know if we can purchase a residential property under the name of the company. We plan to use it as our primary residence and also conduct our business from there. Please tell us the pros and cons of making this purchase.

A: There are probably too many issues to discuss in this answer, but I'll give you a few to start mulling over.

If the home is your primary residence, you may lose tax benefits by placing the home in a limited liability company. For one, under current tax law, if an individual owns a property, that individual can sell the property and exclude up to $250,000 from federal income taxes if that individual used the property as his primary residence for two out of the last five years ($500,000 can be excluded from gain for married couples).

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