Unless the home is used in the ordinary and necessary course of business, you will no longer be able to deduct interest paid on the mortgage. Also, if the property appreciates, you will not be able to use the advantage of Section 121 to exclude some of the capital gains when you sell it.
As well, you lose any protections of federal or state law regarding defaulting on the loan used to purchase your personal residence. (Regarding forgiveness of debt income.) Depending on the loan, it could also change it from non-recourse to recourse.
Frankly, there was a time about a decade ago (probably a bit more) where every fast buck financial adviser was telling people to put their homes in a personal corporation (An LLC which is solely owned is still a little bit in the air regarding some of these issues.) or family limited partnership. The problem was, there was always a wink and a nod about there being some business purpose for the transfer. There usually isn't and the IRS, on audit, crushes the purported benefits of the plan. People try to deduct all the expenses of the house, depreciate it and transfer it back and forth to gain tax and asset protection benefits. Pity.
While the legal differences to the different types of ownership vary from state to state as well (giving different advantages/disadvantages), even with what used to be the major reason (capital gains on sale) almost eliminated in the short term due to the housing market, I just don't see the balancing of the equities lead to the shell corporation is good theory.
