(energetic music) – Hello everyone and welcome
to another Coffee with Carl. I’m your host, Carl Zoellner. I’m one of the attorneys with
Anderson Business Advisors and today’s subject, we’re
going to talk about is homestead exemptions. This question comes up a lot at our events and in Platinum Portal
for our Platinum clients who can ask questions, for you know, 35 bucks a month. So, I’d like to, I wanna
address that homestead exception because it does come up a lot because it is very different
from state to state. Now, most common we like to talk about the homestead exemption states that have unlimited exemptions. Most popular states we tend to deal with are gonna be Florida and Texas with the unlimited homestead. What a homestead exemption is is it’s a state law that
protects the equity, equity in your property. So, in Texas, say if I had
a 10 million dollar house and it was all paid off, every cent of that
equity would be protected from judgment from creditors, okay? So this is a powerful tool and it’s a statutory tool
that’s available to us. But some states, or most states, don’t have unlimited homestead exemptions, so we need to look at
those individual states and what those exemptions are when we’re structuring
your business entities because some folks out there will choose to go ahead to use an LLC for their homestead in their state. Another thing to address when we talk about homestead exemptions is in a lot of places, even if the homestead is low, the homestead exemption will also give you some tax benefit, especially when you’re talking about city and state and local taxes as well. So it’s another piece we need to look at before we put your personal
residence in an LLC. I specifically, or I generally don’t think that putting your
personal residence in LLC is a great idea, simply because I think it’s a little bit of a stretch to claim a business purpose for it. But there is some circumstances
where it may make sense, say if you’re also Airbnbing
your personal residence or things of that nature,
maybe it makes sense. You’re running a home
business out of your house, things like that, but that really leans
more towards the tax side. So when we talk about homestead exemption, like I said, it’s really about the what the state offers in
protection of your equity. Now, sort of our favorite punching bag and sort of every asset and tax person’s favorite punching bag is California. So anybody on here from California, just so you know, your
homestead exemption is $75,000, which means they’re gonna protect about as much equity as probably with the car parked in your garage at this point. California is not very friendly for business or tax planning, but there are a lot of options, especially if you’re a high W-2 earner that we can look at and help
you with some of those issues. So, when we talk, like I said, so when we talk about
homestead exemptions, it’s really about protecting
the equity in those properties by state law and say in
unlimited homestead states, the most times, attorneys
and other creditors won’t even try to attach your
personal residence to that. Now a couple exclusions to that or a couple notes on what’s not
excluded from the homestead, normally your homestead protection, in almost every scenario, won’t protect you from such things as your primary mortgage holder, things of that nature, ’cause if it did, it
would be almost impossible to get a mortgage in that state. So even in Texas, if your
primary mortgage holder wants to foreclose, they
can take your homestead. And in Florida, there’s an interesting one where we talk about that
the law actually reads if you rent your homestead for 30 days and two consecutive years, then that homestead can be abandoned. So we need to look at that in Florida too, especially if you’re looking
to Airbnb your property. So those are some different little items we can look at. Really, what you need is somebody to take a look at your overall picture to make sure you’re setup correctly and not violating some of those items. So, as always, please give us a free call if you’re not a client. We’re more than welcome to have you a free consultation with you as well as if you are a client, get a hold of us any time. Don’t forget to take advantage of all of our free material
on our YouTube channel, don’t forget to catch
Toby on Tax Tuesdays, and I look forward to
seeing you next episode. Thanks for joining me
with Coffee with Carl. (gentle uplifting music)

Homestead Exemption Explained ☕Coffee With Carl EP-24 (New Series)

One thought on “Homestead Exemption Explained ☕Coffee With Carl EP-24 (New Series)

  • December 2, 2019 at 8:46 pm
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    I don't drink coffee but coffee with Carl is good stuff. Keep it up sir.

    Reply

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