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Updated about 8 years ago on . Most recent reply presented by

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36
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11
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Gina Baker
  • Investor
  • Baltimore, MD
11
Votes |
36
Posts

Applying for an LLC when owning properties in multiple states?

Gina Baker
  • Investor
  • Baltimore, MD
Posted

I currently own a buy and hold rental in Baltimore, and plan to relocate my primary residence to the DFW area. Once I settle in, I plan to purchase another buy and hold rental in TX. In which state should I file for an LLC? Are there other options to consider?

Most Popular Reply

Account Closed
  • Investor
  • Denver, CO
582
Votes |
736
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Account Closed
  • Investor
  • Denver, CO
Replied

@Gina Baker  Gina, with all respect, please talk to both a lawyer and a CPA.

It is very easy to form an LLC in both Maryland and in Texas. If you don't have a place to receive mail, then you can hire a company like InCorp Services (about $100 per year) to represent the LLC. This is who will receive things like court documents and subpoenas on your behalf. You will have the choice of creating one LLC for each state, or one LLC owning properties in each state.

If you have a Texas LLC that owns the property in Maryland, then you will need to register in Maryland as a "Foreign Limited Liability Company" with an additional $100 filing fee.

In Texas, it's a bit more expensive.  Registering a new domestic or foreign limited liability company runs $750.

So from a filing perspective, doing it yourself, you're looking at $950 out of pocket right off.

That part is easy.  Here's the hard part....

Texas does not have an individual income tax.  If you hold the properties in your personal name, you will need to report the Maryland portion of your income on a non-resident Maryland income tax return once you move, but you will not be taxed in the State of Texas for personal income (you still have to pay Federal income tax).

HOWEVER, if you have an LLC, that LLC will be subject to a Texas Franchise Tax.

I would hire a CPA/Lawyer that has Multi-State Tax Experience and talk with them about this.  Texas is tough and aggressive on Franchise Tax audits.

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