When buying out of state, where to set up LLC/look for CPA

4 Replies

I live in nyc and will be buying properties to rehab and hold and rent in Jacksonville, FL in next month or so. I'm going to be setting up a LLC to do this with. Is there a reason I should set up LLC in either Florida or NY? I also would like to find a CPA now so I can make sure I'm doing everything right from the beginning to maximize tax breaks, should I look for one local or would it be better to find one from Florida? Does it make a big difference either way?

@Andrew Merewitz , you will have to register the LLC to do business in FL regardless so it usually makes sense to just set it up in FL or else you will be paying double annual fees.

In terms of CPAs, it is vastly more important to ensure they understand your business than their actual location. They do need to be able to do your taxes for the state you are conducting business in as well, but that will be easier to find than someone who really understands how to take advantage of the tax code for a real estate investor.

@Andrew Merewitz

State of LLC Formation
It is normally advised to create the LLC in the state that you will be holding the real estate; Florida in this case.

If you created the LLC in New York - you would be required to register the LLC in Florida; increasing your total costs.

Please also be advised that it can be costly to form an LLC in New York.

Location of CPA
The important aspect of looking for a CPA is that he/she understands the taxation of real estate.
Technology(emails, phones, skype) allows you to communicate properly through an accountant eventhough he/she may not be in the same city as you.
Florida does not have a state income tax.

Basit Siddiqi, CPA

    Generally, you should setup the LLC in the state your properties will be located. But you should consult with your CPA and Attorney.

    Regarding location of CPA, having one that understands real estate taxation and how to strategize your investments is the most important attribute you will need. You should also have a comfort level with your CPA.

    Lance Lvovsky

      Hey @Andrew Merewitz

      I would encourage you to open your LLC in Florida. There is no state income tax here so I don't see why you would need a CPA from Florida specifically. I would think it's more important to have a CPA who understands real estate investors.

      I would recommend you reach out to @Daniel Hyman a fellow BP member who models his business around real estate investors. 

      For forming your LLC though I'm not sure why you would need a CPA. You could do it yourself if you're trying to save money although I would recommend you hire an attorney. It may cost you a few bucks but they will not just form the LLC but create a strong operating agreement as well. Occasionally the default state laws are not what is most beneficial to you and by creating an operating agreement you can protect your interests a bit better.

      I could recommend someone for that as well. Feel free to connect if I can help out in any way. 

      Joseph Hamaoui, Real Estate Agent in FL (#SL3330699)

        Free eBook from BiggerPockets!

        Ultimate Beginner's Guide Book Cover

        Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

        • Actionable advice for getting started,
        • Discover the 10 Most Lucrative Real Estate Niches,
        • Learn how to get started with or without money,
        • Explore Real-Life Strategies for Building Wealth,
        • And a LOT more.

        Lock We hate spam just as much as you

        Join the Largest Real Estate Investing Community

        Basic membership is free, forever.