Out of state rental; taxes & LLC ?'s - Posted by Pete

Real Estate Investing Real Estate Law
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Posted by Rainbow on September 22, 2005 at 21:47:41:

I believe in Florida LP’s pay much more than LLC’s(only an annual registration fee of like 50 or something like that.)

LP’s and LLP’s and LLLP’s in Florida pay outrageous fees and taxes (if I remember correctly from reading the statutes just a few weeks ago when trying to determine which entity to use for my Medical Practice in Florida. I went with an S Corp.

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Out of state rental; taxes & LLC ?'s - Posted by Pete

Posted by Pete on September 21, 2005 at 20:06:43:

I live in NH (no state income tax) and own a rental property in VA (has state income tax) which is in my name. I’d like to move this into an LLC - my questions:

  1. First of all, in my current state am I required to fill out a VA tax return every year?

  2. Secondly, can the LLC be a NH LLC, and if so would I be required to fill out a VA tax return every year? Or does the LLC definitely have to be a VA LLC (which I assume would require a VA tax return each year)?

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Re: Out of state rental; taxes & LLC ?'s - Posted by Jimmy

Posted by Jimmy on September 22, 2005 at 08:11:26:

You can establish an LLC in any state you want, but you must register it to do business in Virginia. Check the Virginia Secretary of State website (or whatever agency handles this) and get instructions.

you might want to talk to a tax advisor in Virginia before you create your LLC. there could be a better ownership arrangement. Here’s why I say this: My properties are in Texas. Texas LLC’s are subject to the Texas franchise tax. But Texas LP’s are not. If I hadn’t consulted with a good tax advisor, I would have blindly set up an LLC and exposed myself to unnecessary taxation.

I don;t know how Virginia works, but find out before you take action.

good luck.

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Re: Out of state rental; taxes & LLC ?'s - Posted by John K. Haslach, CPA, MST

Posted by John K. Haslach, CPA, MST on September 22, 2005 at 04:06:43:

If you have a rental property in a state, you are considered doing business in that state, and need to report the income; regardless of where the entity is formed.