WA state where homestead exemption is $125000.
Now if someone owns a single family house worth $220000 and worried about potential lawsuit.
He is considering putting this home in to a LLC.
Can someone explain what are the advantages and disadvantages? and answer my questions below?
1. I found that it provides protection against liabilities but if this person does not have any other significant assets other than this house - there is not much advantage on this point correct?
2. What about the tax benefits? He is not renting at the moment ...so are there any other tax advantages if he put in to LLC?
3.if home is put in LLC ..does he loose homestead exemption?
4. are there any tax advantages if he sells through LLC ?
also are there any tax advantages if he gifts this property to a family member ?
There is no tax benefits to putting a personal residence into an LLC since this is a personal and not a business asset ... and I don't think you can ... this is really a legal asset protection question and you should be discussing this with a local attorney ... putting it into a trust may be what you need to do but talk to an attorney.
I think you have it backwards. I admit I'm not familiar with Washington law, but I know some states provide protection for a primary residence in case of a judgement. If you put a house into an LLC, then you no longer own it, and thus you lose the protection. Also, the asset doesn't disappear. Your personal asset is now the ownership interest in the LLC, which can be seized in a judgement. Since it's not owned by a person, it isn't qualified for home exemption, senior exemption, or whatever similar benefits exist in your state. If you have already done some act, hiding your assets to avoid paying a judgement could be considered fraud and get you put in jail.