Live in PA, flip in DE in own name?

5 Replies

I'm an experienced investor from PA, but just starting in DE. I've opened another LLC for Delware purchases on the advice of my CPA. However, I wasnt quick enough for a deal I've just encountered, so I wont have the docs they want in time to use the LLC. I cant get ahold of my accountant before my Sunday sign deadline to ask him.

This will be a small flip. What's the problem with buying and selling in DE in my own name, while living in PA?  Is it just simpler for the accountant or is there more to it?  I work in DE, so I know DE filling is a hassle.

In your own name, you won't get the liability protection, but I assume people buy DE houses in their own name all the time, I'm not sure what you're asking.

Aware of and fine with the liability side. As a PA resident and investor, my accountant wanted a separate LLC for DE purchases, and I'm actually not sure why.

Is it just to make his life easier?  Or are there truly complicated tax concerns in DE?  

@Jeannette C aside from Delaware state taxes there really shouldn't be much, you'd have to file a return in DE as well as PA but that is about it, the LLC will have to do so anyway. However I am not an expert on DE tax law.

@Jeannette C

From a tax perspective - there will be no difference.

If you flip a property in DE under your own name - You may be required to file a non-resident tax return with DE since you are doing business within the state(flipping).

If you flip a property in DE under an LLC - you may be required to file a non-resident ta return with DE since you are doing business within the state(flipping).

Some reasons your accountant asked you to create a new DE LLC.

If you "flipped" the property in your first LLC, the first LLC would be required to file a foreign registration with DE; assuming its based out of PA.

Futhermore, opening up a new LLC may be recommended by lawyers if they operate two separate businesses; if the first was a buy and hold and the second is a flip.

I would also seek guidance from attorney's going forward with LLC formation. This is not something an accountant/CPA should be doing.