Can you purchase a home in the name of your LLC because your CPA says it is a good idea?

It is actually a great idea if the agencies allowed it. When purchasing a home in an LLC name that means a business is purchasing the home. If a business is purchasing a home, then that makes it a commercial loan. Fannie and Freddie do not do commercial loans on investment properties.

That does not mean they cannot hold title to their property as an LLC. It just means they cannot refinance or purchase a property in the name of an LLC.

Up to June 1st of 2016 it was not allowed to be transferred after closing and they actually had a clause that says they could call the loan due if they did transfer the title. The document that gave them away was the annual insurance declaration page being sent and it was in an LLC’s name.

These days Fannie and Freddie do allow you to transfer title into an LLC’s name after closing and if you want to refinance you must transfer it back prior to closing a refinance. Seasoning requirements are not hindered by LLC title transfers.

HERE ARE THE CAVEATS

The original borrower(s) must be the majority owner of the LLC on the title. Also, classified as the managing partner. In addition, all original borrowers must be members of the LLC of which at least one must be majority owner on Freddie Mac loans. Fannie does not specifically state all borrowers must be on LLC. Fannie does specify they must be the majority owner of the LLC.

One of the problems I see is someone transfers title to an LLC post purchase. They are in partnership with someone else in a 50/50 ownership and the other person is not going on the loan. In this case it does not work due to the borrowing owner is not a majority owner of the LLC.

The question comes up about primary residences. Can you put a primary residence in an LLC after closing? The answer to that question is yes, IF they have occupied the property for 12 months.

There is a clause in every Note or deed that states you intend to occupy the property as a primary residence for the first 12 months of the loan. After which, you are eligible to do whatever you like with the property. Therefore, on a primary you must wait 12 months. On an investment property you can do it right after closing.