Yes, an LLC can hold title to property in its own name. Every state’s LLC statute treats the company as a separate legal entity with the power to buy, own, and sell real estate, and once the deed is recorded in the LLC’s name, public records show the company as the owner rather than you personally.1Internal Revenue Service. Limited Liability Company (LLC) The harder question is whether you should move a specific property into an LLC, because the transfer can trigger a mortgage acceleration, cost you a homestead exemption, void your title insurance, and shrink your financing options. The answer depends on the property, the loan, and how carefully you handle the mechanics.
What the Liability Shield Actually Does
The main reason property owners use an LLC is to separate personal wealth from the risks tied to a specific piece of real estate. If a tenant or visitor is injured on an LLC-owned rental and sues, the lawsuit generally reaches only the LLC’s assets. Your home, savings, and other property stay outside the case.
That shield can be pierced. Courts will disregard the LLC and hold members personally liable when the separation between the business and its owners has effectively collapsed. The recurring triggers are:
- Commingling funds by paying personal expenses from the LLC’s account or running rental income through a personal account.
- Undercapitalizing the LLC so it plainly cannot meet foreseeable obligations.
- Using LLC property for personal purposes, such as living in a company-owned rental without a lease.
- Ignoring compliance, including missed annual reports and a lapsed registered agent.
Commingling is the most common failure and the fastest way to lose the protection you paid to set up. Keep a dedicated bank account for the LLC, and run every dollar of rent in and every dollar of expense out through it.
The Mortgage Problem Most Owners Miss
If the property has a mortgage, this is the issue to work through before anything else. Nearly every residential mortgage contains a due-on-sale clause that lets the lender demand full repayment when ownership changes. Federal law lists specific transfers a lender cannot use to accelerate the loan, including transfers to a spouse, to a living trust where the borrower stays a beneficiary, and by inheritance to a relative.2Office of the Law Revision Counsel. 12 USC 1701j-3 – Preemption of Due-on-Sale Prohibitions Transfers to an LLC are not on that list.
In practice, many lenders don’t call the loan as long as payments arrive on time, but that tolerance is not a right, and it can end whenever the lender decides. Some owners ask their lender for written consent before recording the deed. Others move title and hope the servicer never notices. The only way to eliminate the risk is to refinance into a commercial loan in the LLC’s name.
Financing a Property the LLC Will Own
Borrowing as an LLC is more expensive and more restrictive than borrowing as an individual. FHA and VA loans are not available to entity borrowers. Conventional Fannie Mae and Freddie Mac mortgages are generally closed to LLCs as well. That leaves commercial loans, portfolio loans from local banks, DSCR loans that qualify based on rental income, and private or hard-money lending.
Expect interest rates roughly 0.25% to 0.875% higher than a comparable owner-occupied loan. On a $400,000 balance, even a half-point increase adds around $2,000 per year. Down payments typically run 20% to 25% rather than the 3% to 5% possible on conventional individual loans. And most lenders still require a personal guarantee from any member who owns at least 51% of the company, which narrows the liability protection the structure is meant to provide.
Tax Effects of Moving Property Into an LLC
Federal Income Tax
For a single-member LLC, the IRS treats the company as a “disregarded entity” by default. You and the LLC are the same taxpayer, so moving property from your name to the LLC’s name is not a taxable event, and you continue reporting rental income and expenses on your personal return, typically on Schedule E.3Internal Revenue Service. Single Member Limited Liability Companies
When two or more people own the LLC, it defaults to partnership treatment. Federal law generally provides that no gain or loss is recognized when a partner contributes property to a partnership in exchange for a partnership interest, so the contribution itself is usually tax-free.4Office of the Law Revision Counsel. 26 USC 721 – Nonrecognition of Gain or Loss on Contribution A narrow exception applies if the partnership would be classified as an investment company.
State Transfer and Recording Taxes
Even a tax-free federal transfer can carry a state or local documentary transfer tax or recording tax. Rates run from zero in some states to more than $14 per $1,000 of value in the highest-tax jurisdictions. Some places exempt transfers where the same person controls both sides of the deal; others don’t. Call the county recorder before you assume the transfer is free.
Property Tax Reassessment
Some jurisdictions treat the transfer as a change of ownership and reassess the property at current market value. If the home has appreciated substantially since you bought it, that reassessment can be a large annual increase. Rules vary by state, and some exempt transfers where proportional ownership is unchanged.
Homestead Exemption
If the property is your primary residence and you claim a homestead exemption, moving title into an LLC will almost certainly disqualify it. Homestead exemptions apply to individuals who own and occupy the home, not to business entities. Losing the exemption can add hundreds or thousands of dollars a year to your tax bill. For a personal residence, a revocable living trust is usually the better tool for both liability planning and estate planning.
How the Transfer Is Actually Done
Before Signing Anything
Confirm the LLC is properly formed and in good standing in its home state. If the property sits in a different state, check whether you need to register the LLC there as a foreign entity. Simply owning property is often exempt, but renting or actively managing it usually counts as “transacting business,” which triggers registration. Operating without it can close the state’s courts to your lawsuits and pile on back taxes and penalties.
Read the operating agreement. It should authorize holding real estate and describe how the transfer is approved. Multi-member LLCs typically require member consent for an asset this size.
Choosing the Deed
You need a deed naming yourself as grantor and the LLC as grantee, with a legal description that matches the current deed exactly. Deed type matters. A quitclaim deed transfers whatever interest you have with no warranties and can void existing title insurance. A warranty or grant deed carries title warranties and is more likely to preserve coverage. For a transfer to your own LLC, a warranty or grant deed is usually the right choice.
Signing and Recording
Sign the deed, have it notarized, and record it with the county recorder where the property sits. Recording fees are usually under $100. Check whether the county also requires a preliminary change of ownership statement or a transfer tax affidavit at recording.
What Happens to Title Insurance and Homeowner’s Insurance
Both policies can quietly lapse the moment title changes.
For title insurance, coverage after a transfer depends on the policy form. Older forms issued before 2006 generally end coverage on transfer. Under the 2006 ALTA form, coverage continues only if the transfer was made without “actual valuable consideration” and you wholly own the receiving LLC, and some courts have treated the liability protection itself as valuable consideration, voiding the policy. The 2021 ALTA form dropped the valuable-consideration requirement, so transfers to an LLC you own are more likely to preserve coverage. Read your policy, and budget for a new one if you’re on an older form. Using a warranty or grant deed rather than a quitclaim also helps.
For property insurance, your homeowner’s policy names you as the insured, not the LLC. Once the LLC holds title, a claim under your personal policy can be denied because you’re no longer the titleholder. Update the policy to name the LLC as the insured, or replace it with a commercial policy. Landlord or commercial dwelling coverage is usually the right fit for a rental, and the policy should include general liability for the LLC, not just property damage. Any gap between the transfer date and the new policy is uninsured time.
Estate Planning: Useful, Not Automatic
An LLC is often sold as an estate-planning shortcut because heirs can inherit membership interests instead of the real estate itself, avoiding a new deed and, in multi-state situations, ancillary probate in every state where property sits. That benefit is real, but it isn’t automatic. Membership interests still go through probate if the member dies holding them in their own name with no further planning. Avoiding probate takes an added step: placing the interest in a living trust, adding transfer-on-death provisions to the operating agreement, or setting up a buyout with the remaining members.
Heirs also don’t automatically step into the deceased member’s shoes. In most states, they inherit only economic rights, meaning the right to receive distributions, unless the operating agreement provides otherwise. Voting and management rights may not pass with the interest. In a single-member LLC, if no successor is appointed within the timeframe state law sets, the LLC can dissolve.5American Bar Association. Business Law Today – Death of an LLC Member Part II The operating agreement should address death directly.
Keeping the LLC in Good Standing
Once the property is in the LLC, the entity has its own upkeep. Annual or biennial reports have to be filed and a registered agent maintained in the state of formation. Filing fees run from $25 to several hundred dollars a year, with a few states charging much more. Miss a filing and the state can administratively dissolve the LLC, which removes the liability shield entirely.
Financial separation is the daily discipline that keeps everything else working. Rent goes into the LLC’s account. Repairs, taxes, insurance, and mortgage payments come out of it. This is the single most important habit for preserving the liability protection, and it matters even for a single-member LLC where the tax reporting doesn’t change.
Beneficial Ownership Reporting
The Corporate Transparency Act originally required LLCs to file beneficial ownership information with FinCEN. That requirement has changed. Under FinCEN’s March 2025 interim final rule, companies created in the United States are exempt from beneficial ownership reporting.6Financial Crimes Enforcement Network. Beneficial Ownership Information Reporting Domestic LLCs holding real estate no longer need to file initial BOI reports, update earlier ones, or correct prior submissions, and FinCEN has said it will not enforce BOI penalties against U.S. citizens or domestic reporting companies.7Financial Crimes Enforcement Network. Interim Final Rule Questions and Answers The reporting rule now reaches only entities formed under foreign law that have registered to do business in a U.S. state.