I am an out of state investor (live in CA) and currently invest in two different states (outside of CA). I created a Wyoming LLC and would love your thoughts on the following:
- Do I need to foreign file in each of the states I own property in? If yes - when do I need to do this by?
- For those of you with multiple LLC's, do you have them under one LLC Holding Company? If so - do you only pay taxes on that one Holding Company or taxes on each LLC?
Thanks in advance!
Foreign file in the state is individual to the state.
Wyoming you have to complete your annual report by 2/1/21 and give them your $25.
We live in CA and since it's a community property state, we are a single member LLC and so our LLC is a disregarded entity and income/expenses flows through to our personal tax return. I have a great real estate familiar CPA I could refer you to if you'd like.
@Todd Rasmussen That would be wonderful! I will message you. Thanks!
You will pay the CA minimum franchise tax fee of $800 on all of your in state organized LLCs and very likely to certain on all of your out of state organized LLCs.
You may wish to look into the definition of "doing business" in California as each LLC may be subject to the $800 annual tax. Likely you would need to file as a foreign LLC in each state where you are doing business, including California if you meet that definition.
*This post does not create an attorney-client or CPA-client relationship. The information contained in this post is not to be relied upon. Readers are advised to seek professional advice.
LLC are flow through entities meaning any profit/loss goes straight to the owner(s) via K-1 and they will need to pay the taxes accordingly on their personal returns. If you house all the LLC under a single LLC then essentially you only need to file one LLC return because all the revenue and expenses would get compiled into a single return of which the K-1 would go to the individual owners. Please do speak with a CPA regarding this if you want to venture down this route to get a more concrete idea and advice.
Since the LLCs are operating in different states then you will need to file a return for those states respectively. Each state also has their own minimum fees that may need to be paid and they can vary greatly. Please discuss this with your CPA in detail as well
You will be absolutely amazed at what will pass for "doing business in CA" for foreign organized LLCs.
Do you have a pulse?
You normally need to register your LLC to do business in each state that it does business in. Owning a rental property can be considered doing business.
Regarding filing of tax returns in states where you own a property.
In general, the answer is yes, you are required to file a tax return in a state where you have property in. There may be some minimum threshold on receipts or net income. Even if there is no filing requirement, you may want to consider filing to obtain your suspended loss carryforward.
If the LLC is multi-member, the general deadline will be March 15.
If the LLC is single member, the general deadline is April 15.