State income tax property in non income tax state LLC

3 Replies

I currently have an LLC in TN. The 2 properties currently in this LLC are both in TN. TN has no state income tax. I was considering adding a property that is in Georgia into this LLC. Georgia has a state income tax. I have found conflicting info, that doing this could cause me to have to pay state income taxes on the entire LLC income. Are there any other negatives that I might not be considering? Can someone clarify this for me? If this is the case I will not be adding this property into this LLC. Thanks in advance.

I've got a similar situation (live in WA, buying property in GA).  I'm also not completely clear on out of state tax implications.

@John Parshall @Steve French

Doing business across multiple states within 1 entity requires you to apportion the income among the states. Each state has different rules on apportionment. Apportionment factors factor in Sales(rental income), Property(Building & land) and Payroll.

John in your case - You will need to research how Georgia requires you to apportion the income. Georgia shouldn't tax 100% of the income.

John - one thing you may want to look into is that even though Tennessee does not have a state income tax - they do have a franchise/gross receipts tax that you may be subject to.

One other thing to factor in is that your LLC will need to register with the Secretary of State as a foreign LLC in the new state that you do business in.

I recommend that you set up a Georgia LLC for your Georgia property. That will make it easier for you to track your income and expenses.

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.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.