For most Americans, owning a home is usually one of your largest assets and represents the American Dream. People want to feel safe, especially within the walls of their home. They especially want to make sure that their home is protected in the event of a personal or business lawsuit.
Creating a well-drafted asset protection and tax plan by using LLCs or Limited Partnerships in conjunction with a Living Trust can provide peace of mind knowing your home is protected and will pass to your heirs probate free. Unfortunately, there are several concerns that must be addressed before putting your home into an LLC, Limited Partnership or other legal entity that must be considered first. Care must be taken to protect your home and not just any financial or legal professional will be well-versed on the following pitfalls.
Why are Homes Difficult Assets to Protect?
- Due on sale clause. Transferring the asset into an LLC or Limited Partnership can cause problems if you have a mortgage on the property. Although rare, the mortgage company can call the loan due if they feel that you are transferring the asset out of your name.
- Loss of capital gains exclusion. When transferring into another entity you can lose the capital gains exclusion (exclude up to $250,000 of that gain from, or up to $500,000 of that gain filing jointly during 2 of the last 5 years of ownership. See IRS article here).
- Loss of mortgage interest deduction. Potential loss of mortgage interest deduction when transferred to a legal entity such as an LLC or Limited Partnership
- Real Estate Transfer Fees. Some states have transfer fees when transferring into another legal entity.
- Property tax reassessment. Some states have property tax reassessment when transferring to another legal entity.
- Tax filing requirements. Yearly tax requirements are generally required every year with another entity that must be complete in order to continue to provide protection.
Common Homeowner Asset Protection Solutions
- Homestead protection. Each state will have a level of homestead protection that will vary. Anywhere from a few $100 to complete protection can be protected by your state law (states with 100% Homestead protection: Florida, Iowa, Kansas, Oklahoma, Arkansas, S. Dakota, Texas, Wash DC. See complete list of all state protections here). Homestead is not always automatic, and some states require you to apply for this protection. Will also vary if you are single or jointly owning the asset. Does not protect rental properties.
- Tenancy by the entireties. Spouses own indivisible interest and cannot attach judgment without attaching to both spouses. Not available in all states. Usually not usable if not married, a spouse dies, divorce, etc.
- Home equity line of credit. Very easy to put a HELOC on a home to take out the equity and put a lien (mortgage/HELOC) on the equity of the home.
- Revocable Living Trust. Potential protection but not consistent asset protection in every state.
- Single-Member LLCs. Not every state recognizes SMLLCs and protection can be limited.
- Family Limited Partnerships. Very strong and lengthy asset protection history but several concerns must be considered before making this move.
Watch a video on protecting your personal residence below.
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Protect Wealth Academy strives to make a difference in your life and the ones whom you love. We have been working closely with nationally recognized authorities from the legal and financial sectors to bring to you a plethora of strategies for better wealth management. Through the webinars and in-person seminars conducted by trusted industry experts, you can look forward to securing a financially healthy future for you and your loved ones for lasting peace of mind.
How We Can Help Homeowners
Protect Wealth Academy can help homeowners through the following:
- Asset Protection
Asset protection is essential if you have significant assets or a business. The process can help to protect your hard-earned assets that can include real estate, bonds, cash, stocks, and others, from potential lawsuits. Using Limited Partnership, LLCs, Corporations and Trusts to protect your hard-earned assets.
- Stock Market
You can expand your investment portfolio through the right strategies to build your wealth. At Protect Wealth Academy, we can connect you to leading investors who can train you to better manage your stocks in a safe yet effective manner.
- Income Tax Reduction
Learn about the different strategies that will help you better manage your taxes. We hold webinars and in-person seminars conducted by nationally recognized financial experts.
- Estate Planning
Estate planning needs to be done early to ensure that your assets are properly handed over to the intended parties after your demise.
Maintaining proper bookkeeping will provide you with an accurate depiction of your business finances. You are able to keep track of your past financial performance to help you make the necessary decisions for company growth.
- Self-Directed IRAs
Using self-directed IRAs can help you to maximize your asset returns. For professional guidance, connect with the best investors in the industry through the webinars and in-person events at Protect Health Academy.
- Real Estate Training
Investing in real estate requires careful expertise to help secure deals that match your financial objectives. To be sure of the potential returns, get professional guidance from industry experts.
Why Should Homeowners Work with Protect Wealth Academy?
Protect Wealth Academy has been helping homeowners and other clients to better manage their assets and expand their financial portfolio for many years. We have connected them with reliable professionals who have had years of experience in the financial and legal sectors, delivering world-class expertise for every aspect of investments, wealth protection, and asset management.
If you have any questions about Protect Wealth Academy’s services for homeowners, feel free to contact us today.
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