Short answer: yes, you can move your house into a business you own.
Longer answer: for most people who ask us this, it is not worth doing. And the word “sell” is usually wrong, which matters more than it sounds.
We are not CPAs or attorneys. Nothing here is advice for your situation. But we have watched people move houses into LLCs, and we have seen what it costs them when nobody walked them through it first. So here is the plain version.
First: The IRS May Not See a Sale at All
This is the part that surprises people, so let’s get it out of the way.
Say you own an LLC by yourself. Just you, no partners. You did not file anything to have it taxed as a corporation. That is called a single-member LLC, and the IRS treats it as a disregarded entity.
Disregarded means exactly what it sounds like. For income taxes, the IRS looks straight through the LLC and sees you. The IRS says it plainly: the LLC’s income, deductions and gains go on your own tax return, and the LLC “should not file an income tax return.”
So when you “sell” your house to that LLC, you are selling it to yourself. There is no gain. There is no loss. There is no new cost basis for the LLC. Money moving from your business account to your personal account does not change that.
If somebody told you this move creates a tax deduction or a bigger write-off, ask them to show you where. For a single-member LLC, the sale itself does nothing.
What it can do is change how the house is treated going forward — if the house becomes a rental. But you do not need to sell it to yourself to make that happen.
Six Things That Do Change
The sale may be invisible to the IRS. The rest of it is not invisible at all.
1. Your mortgage
Almost every mortgage has a due-on-sale clause. If you transfer the property, the lender can demand the whole loan back.
There is a federal law that blocks lenders from doing this in certain cases. It is called the Garn-St Germain Act. It lists the transfers a lender has to let go. The list covers things like a transfer to your spouse or children, a transfer after a death, a divorce settlement, and a transfer into a living trust where you stay the beneficiary.
A transfer to an LLC is not on that list.
So the lender is allowed to call the loan. Do most of them? No. Lenders usually keep taking the payment. But “they probably will not notice” is a weak plan when the downside is being asked for the full balance.
If your house has a mortgage, call the servicer first and ask in writing.
2. Your title insurance
This one almost never comes up, and it should.
The owner’s title policy you bought at closing protects you. The standard policy forms say coverage can follow the property to a company you wholly own — but only when the deed is handed over without payment of actual valuable consideration.
Read that again, because it is backwards from what people expect. If you give the house to your own LLC, coverage may follow. If you sell it to your own LLC for money, you may have just walked away from the policy you paid for.
Call your title company before you sign anything. Ask them directly whether your policy follows the deed you are about to record.
3. Your homeowner’s insurance
A homeowner’s policy covers an owner who lives there. Once the house is owned by a business and rented out, that policy is the wrong policy. You need a landlord or commercial policy.
This is not paperwork you can get to later. If a tree comes through the roof in the gap, the claim can be denied because the named insured no longer owns the house.
4. Your Virginia property tax breaks
This is the big one around here, and it is the reason we wanted to write this post.
Hampton Roads has one of the largest veteran populations in the country. Virginia gives a 100% real estate tax exemption to veterans with a total service-connected disability. There is also a separate break for owners 65 and older and for people who are permanently and totally disabled.
Both of those laws spell out how you are allowed to hold the property. Both of them list the veteran or the eligible person owning it, alone or with a spouse. Both of them also allow a revocable living trust, or an irrevocable trust where you hold a life estate.
Neither law lists an LLC, a partnership or a corporation.
We are not going to tell you what your city will decide. We are telling you the statutes name trusts and do not name companies. If you are getting either of these exemptions, call your city’s Commissioner of the Revenue before you move the deed. A 100% exemption on a $450,000 house is thousands of dollars a year. That is not something to find out about in July.
5. Your capital gains exclusion
When you sell a home you have owned and lived in for two of the last five years, you can exclude up to $250,000 of gain from tax. $500,000 for a married couple filing jointly.
That clock is tied to you living there. Move the house into a business, turn it into a rental, move out, and the five-year window starts running out. Wait too long and the exclusion is gone.
Some people are giving up a $250,000 tax break to get a liability shield they could have gotten with an insurance policy. Worth doing that math first.
6. If it really is a sale, the tax rate may surprise you
Everything above assumes a single-member LLC. If the buyer is a real separate taxpayer — a corporation, or an LLC you do not fully own — then the sale is real, and a different rule shows up.
Under section 1239 of the tax code, when you sell property to an entity you control by more than 50%, and the property will be depreciable in that entity’s hands, any gain you recognize is taxed as ordinary income instead of at capital gains rates.
A rental house is depreciable. So the gain above whatever exclusion you can use gets taxed at your regular income rate, not the lower long-term rate.
There is a matching rule going the other way. If you sell at a loss to a company you control, the loss is disallowed. You do not get to use it.
Short version: this is a real CPA question, not a weekend decision.
The Good News: Virginia Does Not Charge You to Do It
Here is where Virginia is genuinely friendly.
Normally a Virginia deed carries two taxes. The grantor’s tax, which the seller pays at $1.00 per $1,000. And the recordation tax, which the buyer normally pays at $2.50 per $1,000 plus a local share.
Virginia law exempts a deed to a partnership or an LLC “when the grantors are entitled to receive not less than 50 percent of the profits and surplus” of that company. And the same section carries that exemption over to the grantor’s tax.
So if you own the LLC, there is no transfer tax on the move. You pay the clerk’s recording fees and whatever your attorney charges. On a $400,000 house that is the difference between a few hundred dollars and roughly $1,400.
Do not assume. Have whoever prepares the deed cite the exemption on its face, because the clerk will charge you if it is not there.
The Quitclaim Deed Mistake
A lot of articles about this — including the one that used to be on this page — tell you to use a quitclaim deed. We want to correct that, because it was on our site and it should not have been.
A quitclaim deed hands over whatever interest you happen to have. It promises nothing. It does not say you actually own the place. It does not say the title is clean.
That is fine for clearing up an old mistake or moving a sliver of land between neighbors. For moving your house into your own company it can create a problem you do not see for years — the next time you try to sell or refinance, and somebody looks at the chain of title and finds a deed that warrants nothing.
For a transfer like this, Virginia attorneys normally use a special warranty deed. Have a real estate attorney prepare it. In Virginia this is an hour of work and it is cheap compared to fixing it later.
So When Does This Actually Make Sense?
We are not against it. There are people who should do it. Usually they look like this:
- The house is already a rental, or is about to be, and it is never going back to being your home.
- You own it free and clear, or your lender has said in writing that it is fine.
- You own more than one property, or you are building toward that, and you want them held separately.
- You are not claiming the veteran exemption or the elderly and disabled exemption.
- You have talked to a CPA about the basis and the gain, and an attorney about the deed.
And it usually does not make sense when:
- It is your home and you plan to keep living in it.
- You are inside the two-of-five-year window for the capital gains exclusion and about to lose it.
- You have a mortgage and have not asked the lender.
- The real goal is liability protection, and nobody has priced an umbrella policy as the simpler alternative.
That last one comes up constantly. An LLC is not the only way to protect yourself, and it is the one with the most moving parts.
If What You Actually Want Is Out
Sometimes people ask us this question and what they really mean is: I am tired of this house and I am looking for a way to stop dealing with it.
If that is you, moving it into an LLC does not fix anything. You still own it. You still get the call when the water heater goes.
If you want out, here is exactly how we work out a cash offer, so you can decide without talking to us:
We figure out what the house will be worth once the work is done. Our offer lands between 70% and 80% of that number, and that range has to cover both what we pay you and what we spend on the renovation.
Say the house will be worth $400,000 fixed up and needs $60,000 of work. 75% of $400,000 is $300,000. Take out the $60,000 of renovation and the offer is around $240,000.
That is below retail, and we will say so plainly. What you get for the difference is no repairs, no commissions, no closing costs, and a closing date you can count on — usually 10 to 14 days, or later if you need more time.
And if your house is in good shape, an agent will beat our number. We will tell you that on the walkthrough. We have done it plenty of times.
We buy across Hampton Roads: Virginia Beach, Norfolk, Chesapeake, Portsmouth, Suffolk, Hampton and Newport News.
Common Questions About Selling Your House to Your Business
Can my business buy my house with a loan? Yes, your company can buy your house, but paying for it is the hard part. Most home mortgages are made to people, not companies. If your business needs a loan to buy a house with an LLC, it will usually need a commercial or investment loan instead. Those often come with larger down payments, higher rates, and a personal guarantee from you, which means you are still on the hook if the business can’t pay. Some asset-based lenders will lend against the property itself, but they charge more for that risk.
Can I sell my house to my own LLC? Yes. But if the LLC is a single-member LLC that has not elected corporate treatment, the IRS disregards it, so the sale is not a taxable sale at all. It is you selling to you.
Will my mortgage lender find out? Deeds are public records in Virginia, and lenders do run checks. The bigger point is that a transfer to an LLC is not one of the transfers the Garn-St Germain Act protects, so the lender is allowed to call the loan. Ask before you move it.
Does moving my house into an LLC save me on taxes? Not by itself. What changes your tax picture is the house becoming a rental, and that can happen whether or not an LLC owns it. For a controlled entity, section 1239 can actually make the gain taxable at ordinary rates instead of capital gains rates.
Will I pay Virginia transfer taxes? Generally no, if you are entitled to at least 50% of the profits and surplus of the LLC. Virginia law exempts that deed from the recordation tax and carries the exemption over to the grantor’s tax. You still pay recording fees.
Will I lose my veteran’s property tax exemption? Ask your Commissioner of the Revenue before you do anything. The statute lists ownership by the veteran, by the veteran and spouse, and through certain trusts. It does not list LLCs or corporations.
What kind of deed should I use? Talk to a Virginia real estate attorney. A quitclaim deed warrants nothing and can create title problems later; a special warranty deed is the normal choice for a transfer like this.
This article is general information about Virginia law and federal tax rules. It is not legal or tax advice, and we are not attorneys or CPAs. Your situation may turn on details this page does not cover. Please talk with a Virginia real estate attorney and a CPA before you move a deed.