Hi All! I'm currently residing in Florida where there's no income tax but looking to invest out of state where there is and had a couple questions regarding the matter.
1. Do I setup an LLC in the state I'm investing in?
2. If I setup an LLC, I'll qualify for commercial financing which I don't want, however, I want the protection the LLC provides. If I transfer title after the purchase, it might trigger a due on sale clause?
3. How are investors cash flowing with paying income taxes from out-of-state investments?
4. What legal structure do you recommend I setup?
Typically you want the LLC where the rental is.
Any time you QC a title into an LLC it COULD trigger a due on sale, that's a risk you're taking unless you finance it commercially in the LLC.
States tend to tax based on what income is generated there. So if your rentals are in a state that DOES have state income tax they'll want their portion.
Legal structure is a question for your attorney based on your situation. Just as a rule don't put your rentals in a corporation.