Ask Terry Questions LLC for retirement property now rented?

LLC for retirement property now rented?

By Terry Savage on September 01, 2019 | Housing / Real Estate

Dear Terry ,

In 2015 my husband & I moved from Illinois to Tennessee. My mother back in Illinois needed a full time caregiver.
So we rented the Tennessee home in 2017 . The home was paid for.
Now mom has passed Juli 31,2019 & we are staying in Illinois to help a daughter with our grandchildren.
We are looking to buy , but I hate to have a mortgage.
My ideas are start a llC & have it buy the Tennessee house .. Use the mortgage on that to pay for a Illinois house.
Or , liquidate my Roth 52,000 & ira 30,000. Plus my husband has a IRa 150,000of. To buy the illinois home.
Looking forward to you ideas or if you need more info.

Terry Says

First of all, a pat on the back for being so willing to help both generations.  You are truly the best example of the “sandwich generation.”

I will skip the suggestion that maybe it would be better for all concerned if your daughter moved to Tennessee?  But I hope you have considered that — lower taxes, more job opportunities, etc~  And if you are Tennessee residents you will escape a potential Illinois tax on retirement income (a suggestion that has been floated)!

I understand that you hate having a mortgage.  Since you’re already renting the Tennessee house, it is likely no longer your primary residence. But you don’t need an LLC for renting — and a mortgage on that house as a rental will be more expensive than taking out a mortgage in Illinois.

So if you insist on being in Illinois after all this, at least you’re buying at a time when both prices and mortgage rates are low.  But have you considered renting in Illinois?   It seems that is the most flexible solution.  Surely you deserve your retirement, and your daughter can’t need you forever?

Whatever you do, do NOT take money out of your retirement account for anything!!  One day you will really thank me for following that advice!



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