Tom's Blog

Corey asks the following question:

Q: Tom, We have a Vacation home that we would like to put into an LLC for asset Protection. The LLC is owned by the AMLP. What are the options for doing this. I realize that we will not be able to deduct the Mortgage interest on our personal return after we do this. Do we need to rent the Vacation home from the LLC for our personal use(it is all personal usage no rentals for this home) in order to maintain the corporate legalities for asset protection? If we did rent it to ourselves would it have to be a net zero lease for taxes? Just looking for the best way to handle this with respect to taxes and asset protection combined. Thanks again! Corey

A: Corey, putting your vacation home into an LLC will not affect your mortgage interest deduction. Especialy if it is still owned by you and your spouse. In fact, you won't even have to file a separate tax return for the LLC as it can be considered a disregarded entity for tax purposes.

I don't recommend you rent it to yourself. You actually can lose tax benefits by doing so. There are several other tax benefits you can achieve with a vacation home, especially if you rent it out or if you have a business that you can rent it to.

Warmest regards,

Tom