Real Estate Agent · Brooklyn, NY · Member since 2015 · 58 posts · 11 votes
I have an LLC I formed last year in Connecticut but have been unsuccessful with landing a deal I was happy with in that state. Just found an amazing deal in Michigan. It seems it would be easiest to just use my Connecticut LLC especially because I have a bank set up with it for this property. Will I have to pay double taxes though? Is it worth dissolving and starting over in Michigan?
Yes, you will be taxed in the state in which the property is located. In addition you will have to register that CT LLC as a foreign entity doing business in MI. No double taxes, you will get a credit for the taxes paid to MI.
Yes, you will be taxed in the state in which the property is located. In addition you will have to register that CT LLC as a foreign entity doing business in MI. No double taxes, you will get a credit for the taxes paid to MI.
You say that you have formed a CT LLC which plans to do business in MI. Your location says you are from NY. You ask if you will be double taxed? I am assuming that your question is only asking about state income taxes.
The answer you received from @Steven Hamilton II is accurate, but may need some clarification. If your state of residence is NY, then any income earned by the LLC will be taxed by the state where the income is earned (MI), by the state where the LLC is organized (CT), and by the state where you live (NY). All three states will tax the LLC income. CT should give you a tax credit for the state tax paid to MI, and NY should give you a tax credit for whatever state taxes the LLC paid to both CT and MI.
Not entirely true. CT which has no source income has no filing requirement. he must register the LLC in MI anyway as a foreign entity doing business. Should he file a CT return... Yes in my opinion to begin statute of limitations. But he will only get a credit from NY as there is no tax due to CT.