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In Florida, should you own your principal residence in an LLC?

On Behalf of | May 14, 2015 | Elder Law, Estate Planning |

In certain situations, Florida property owners recognize the benefits of owning real property in a Limited Liability Company (LLC). In particular, such ownership can protect the owner’s other assets from liability in a lawsuit. It may also make transfer at death easier. However, in doing their estate planning attorneys can be asked by clients whether they should title their primary residence in an LLC.

The basic answer in almost every instance will be a resounding “No.” In Florida, a resident’s primary residence constitutes their “Homestead.” Florida offers homeowners meaningful benefits when it comes to their homestead. Among these are reduced real estate taxes and exemption from liability for claims of creditors.

Most authorities acknowledge that when a person’s residence is titled in an LLC, it does not qualify for the homestead tax exemption. This can mean significant additional real estate taxes being paid each year. This alone should be reason enough not to title one’s principal residence in an LLC. 

In addition, because a Florida resident’s primary residence is their homestead, it is exempt from creditor claims. This protection arises Art. X, Section 4(a)-(b) of the Florida Constitution. Since the property is already protected, there is no benefit to titling it in the name of an LLC. 

As far as making transfer easier at the death of the owner (by avoiding probate), once again the LLC is not the way in which this should be accomplished. Instead, the residence should be titled in a Living Trust. When properly drafted, the property maintains its tax and liability protections as homestead even while titled in the name of the Living Trust. 

In issues involving titling of real property, especially involving one’s principal residence, you should seek advice from an experienced Florida attorney.


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