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  1. #1
    Join Date
    Dec 2017

    Default How to Protect Equity in an Income-Generating Property

    Hi I currently own a house( which I owe a lot on) and an rental unit( which I almost have paid off).

    I currently have 400k equity in my rental unit which is a key part of my retirement. I have a LLC set up on this rental unit so that if I get sued I won't loose my house.

    I'd like to pay off my smallest Depts first(The rental) but I'm not sure in this case.

    Should I move that 400K equity from the rental LLC into my home so that if a renter sues me they won't have access to that 400K? Am I understanding this correctly? Is this a good idea?


  2. #2
    Join Date
    Oct 2016

    Default Re: Should I Hold Equity in My Home or Rental

    While an LLC does offer some protection a single member LLC is not that tough to crack. What you need is a good insurance policy with an umbrella policy attached.

  3. #3
    Join Date
    Sep 2010

    Default Re: Should I Hold Equity in My Home or Rental

    I agree with PG. If you are sued, all your assets are potentially attachable (you didn't indicate your state so we can't say what exemptions there might be). Even the property in the LLC (since you own the LLC, the LLC owns the property, it can be taken). In the case of a renter, the LLC does little for you. First, you are still responsible for your own actions, so they can sue you for anything they allege YOU did. Second, what we have here is pretty much is a thinly veiled personal asset and that veil is easily pierced.

    Depending on your unnamed state, your house may have already had protections, but as PG says, insurance is probably your best bet.

    There's not enough information here to determine the tax implications. I suggest you spend some time with a tax planner. You need to be depreciating the rental. You'll have to recapture that whther you took it or not.

  4. #4
    Join Date
    Dec 2017

    Default Re: Should I Hold Equity in My Home or Rental

    Myself and the rental property are located in Utah. Thanks you, this is some good advise!

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