Investors love LLCs — and for good reason. Holding a rental or investment property in a limited liability company can shield your other assets if something goes wrong. But there's a version of this move that quietly backfires: deeding the home you actually live in to an LLC. In Florida, that can cost you your most valuable tax break. Here's the full picture.
- An LLC can protect investment property, but deeding your homestead to one can strip key benefits.
- You can lose the homestead exemption, the Save Our Homes cap, and homestead creditor protection.
- Transfers can trigger due-on-sale and doc-stamp tax on any mortgage.
- Your existing owner's title policy insures you, not the new LLC.
Why investors use an LLC
For a rental or investment property, an LLC separates that asset from your personal finances, so a lawsuit tied to the property generally can't reach your other assets. It also simplifies co-ownership and estate planning. For investor closings, taking title in an LLC is routine.
The homestead problem (for your primary home)
Florida's homestead exemption, the Save Our Homes 3% assessment cap, and homestead creditor protection all apply to natural persons who live on the property. An LLC is not a person. Deed your owner-occupied home to an LLC and you generally:
- Lose the homestead tax exemption (up to $50,000 off taxable value).
- Lose the Save Our Homes cap, so the home is reassessed at market value — often a big tax jump.
- Lose Florida's powerful homestead creditor protection.
⚠️ The rule of thumb: LLC for investment property, not for the homestead you live in. Talk to a CPA and attorney before moving any primary residence.
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Two more things that bite: mortgage & doc stamps
Due-on-sale: most mortgages let the lender call the loan when the property transfers. Federal Garn–St. Germain protections cover some residential transfers, but a transfer to an LLC may not qualify — check with your lender first. Doc stamps: if the property is mortgaged, Florida documentary stamp tax is generally due on the loan balance when you deed it to the LLC; unencumbered transfers to a wholly-owned entity are usually minimal.
Title insurance & the deed
Your existing owner's title policy insures you — not the new LLC. When you transfer, you may need a new policy or an endorsement so the LLC is covered, and the deed (often a special warranty or quitclaim) should be prepared to keep your title chain clean. A quick title search confirms current vesting first.
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General information, not legal or tax advice. Entity and homestead decisions have significant tax, asset-protection, and lending consequences unique to your situation — consult a Florida attorney and CPA before transferring any property.
