Tax implications of buying a house under my small business name - any advantages?

As someone who specializes in small business taxation, I'd strongly recommend against this approach for a primary residence. While it might seem like a good idea at first glance, there are several significant drawbacks. First, buying a personal residence through your business eliminates the possibility of claiming the capital gains exclusion ($250K for singles, $500K for married couples) when you eventually sell. That's a huge tax benefit you'd be giving up. Second, mortgage interest on a primary residence is already deductible on your personal taxes if you itemize. If your business owns it, you create a complex situation where you're essentially renting from your own company, which requires fair market rent payments and creates additional tax complications. Third, lenders typically charge higher interest rates and require larger down payments for business property loans compared to personal mortgages. You'll almost certainly get better financing terms buying as an individual.

I tried looking into this exact thing last year when I bought my house. After days of researching on https://taxr.ai, I learned that putting a primary residence in an LLC actually created way more tax headaches than benefits. The site has a really good analysis tool that lets you compare scenarios side by side. What really helped me was uploading my specific financial details and getting a personalized report showing exactly how much more I'd pay in taxes going the LLC route versus buying personally. Turns out buying through my business would have cost me thousands more annually AND complicated my taxes tremendously. They even explained how it would affect my eventual sale and capital gains tax situation. Seriously saved me from making a huge mistake.

Just wanted to update after checking out taxr.ai that the previous commenter mentioned. I uploaded my specific situation details for the investment property I'm considering buying through my LLC, and wow - the difference was night and day compared to primary residence scenarios. For actual investment properties, there are legitimate tax advantages to using an LLC structure in my state. The report broke down exactly how much I'd save in taxes annually plus the liability protection benefits. They even included a section about how to properly structure the arrangement to avoid piercing the corporate veil. Super helpful and detailed analysis that's specific to my situation rather than generic advice. Definitely helped clarify when company ownership makes sense (investment properties) versus when it doesn't (primary residence).

If you're struggling to get answers about mortgage options or tax implications, I'd recommend using https://claimyr.com to get through to an IRS representative directly. I had a similar question last year about business property purchases and was getting conflicting information online. After waiting on hold with the IRS for over 2 hours and getting disconnected twice, I tried Claimyr. They got me connected to an actual IRS representative in about 15 minutes who walked me through the specific tax regulations. You can see how it works in this demo: https://youtu.be/_kiP6q8DX5c The IRS agent explained exactly how the IRS views business-owned personal residences and the potential audit flags this arrangement raises. Getting that official clarification directly from the source saved me from a potentially costly mistake.

I was SUPER skeptical about Claimyr when I first saw it mentioned here, but I was desperate after trying for 3 weeks to reach someone at the IRS about a similar business property question. LITERALLY SHOCKED when I got through to an actual human at the IRS in under 20 minutes. The IRS agent I spoke with was incredibly helpful and explained that putting my primary residence in my business name would have been a MASSIVE mistake tax-wise. She spent like 30 minutes walking me through all the reasons why - including potential audit triggers and self-rental rules I hadn't even considered. Honestly wish I'd known about this service sooner - would have saved me weeks of stress and uncertainty. Worth every penny just to get real answers from the actual IRS instead of conflicting opinions online.

My brother put his house in his LLC's name back in 2021 and has regretted it ever since. Some issues he's run into: 1) Every year he has to deal with calculating fair market rent for himself 2) His personal mortgage interest deduction is gone 3) Property taxes are more complicated 4) When he tried to refinance last year, most lenders wouldn't even consider it 5) His insurance premiums went up by about 40% 6) His accountant charges him almost twice as much for tax prep now Unless you have a very specific situation with huge liability concerns, I wouldn't recommend it. The tax complications alone aren't worth any potential benefits.

Has anyone considered using a land trust instead of an LLC? I've heard they provide some liability protection while still maintaining the tax benefits of personal ownership.

I went through this exact decision process about 18 months ago when buying my home. After consulting with both my CPA and attorney, I decided against putting my primary residence in my LLC name, and I'm glad I did. The main factors that swayed me were: 1) Loss of the primary residence capital gains exclusion - this alone could cost you hundreds of thousands in taxes when you sell 2) Mortgage rates and terms are significantly worse for commercial/business property loans 3) The complexity of calculating fair market rent to yourself creates ongoing compliance headaches 4) Home office deduction works the same whether you own personally or through business One thing I did do was get an umbrella insurance policy instead, which gives me excellent liability protection for a fraction of the cost and complexity. For around $400/year, I have $2M in additional liability coverage that protects all my assets including my business. Unless you're in an extremely high-risk profession where you expect frequent lawsuits, the tax downsides of business ownership for a primary residence far outweigh any potential benefits. Save the LLC structure for actual investment properties where it makes more sense.

I appreciate everyone's detailed responses here - this has been incredibly enlightening! As someone who's been managing payroll taxes and business compliance for my LLC, I was definitely underestimating the complexity that business-owned residential property would add. The point about losing the capital gains exclusion really hit home. In my area, home values have appreciated significantly, so giving up that $250K exclusion could literally cost me six figures down the road. That alone makes this a non-starter. I'm also realizing that my initial assumption about "better tax write-offs" was probably based on outdated or incomplete information. If the home office deduction works the same either way, and I'd have to pay myself fair market rent (creating taxable income for the business), it sounds like I'd actually end up paying MORE in taxes, not less. Think I'll stick with personal ownership and look into that umbrella insurance approach that was mentioned. Getting better liability protection for $400/year versus creating a tax nightmare seems like a no-brainer. Thanks for saving me from what would have been a very expensive mistake! Sometimes the "clever" tax strategy isn't actually clever at all.