Hi,
Does anyone know if I need to have a CA LLC to buy real estate in CA? I have a Neveda LLC and my accountant is saying that I need a CA LLC if I’m buying here. I don’t think it makes sense to pay for two LLCs. What are your thoughts on this? Thanks!
No, any “person” can buy in all 50
Much as the PR (Peoples’ Republic) of CA might like to make that decision, not it’s right to do so and your anywhere-LLC can buy and hold RE in any state.
Your LLC doesn’t even have to register as “doing business”* in most states unless it’s being held and being used for rental income.
*A legal term-of-art that has a legal trail of thousands of court battles and decisions in all states (I suspect). A good, free little law book on “Doing Business” can be ordered from CT Corp, www.CTAdvantage.com and this little annual-publication tells you how this issue has been handled in every state.
There is so much confusion to LLC’s. The whole point of putting real estate into an LLC is to protect you. And in order for this to work, the LLC must formed in the state where the property is. A Nevada or Wyoming LLC will do nothing if your property is not in those states. I don’t get why people still form a Nevada LLC even though their property is in CA. If you do that, you still have to pay tax in CA. So what’s the point? Your accountant is telling you the truth.
[QUOTE=aristotle;884478]There is so much confusion to LLC’s. The whole point of putting real estate into an LLC is to protect you. And in order for this to work, the LLC must formed in the state where the property is. A Nevada or Wyoming LLC will do nothing if your property is not in those states. I don’t get why people still form a Nevada LLC even though their property is in CA. If you do that, you still have to pay tax in CA. So what’s the point? Your accountant is telling you the truth.[/QUOTE]
Yes agree. I realized that now from my accountant. What a waste of money and does nothing for me. I am cancelling my NV LLC and filing a new CA LLC.
LLC can be formed anywhere
Any LLC formed anywhere can own a prop in any state and since LLC is a separate, recognized legal entity (person) it’d be insulation between you and a lawsuit arising from that prop.
Now if that LLC or Corp is actually doing business as defined by the RE’s state law then it’d be necessary to register it in the RE’s state and pay an annual fee or it might be precluded from entering its defense.
If you are rehabbing a house or two, or have a few rentals, then its not really worth it to organize outside of the state in which your operating.
However, once your business model or your corporate structure needs become more complex, then it starts to make sense to organize in a place like NV. There are meaningful benefits such as, Nevada doesn’t require corporations to list the names of its shareholders. Another benefit is Nevada lacks a formal agreement obligating the state to share information with the IRS.
In the beginning, these kind of things dont matter, but eventually as your business grows, these benefits have much more value, and thats why some people do it.
I am more knowledge about this subject matter. I can make a better decision now. Thank you for all your responses.