New Jersey Resident Doing Wholesale Deals in NY

Tax, SDIRAs & Cost Segregation
6yFollow

New Jersey Resident Doing Wholesale Deals in NY

Dave Pricken
Wholesaler · Wayne, NJ · Member since 2010 · 24 posts · 3 votes

Hi, I have a wholesale deal closing in NY and I live in NJ. I created a NY LLC for my wholesale deals, but want to get the money back to an LLC that I have in NJ. Should I take the funds/profits from the wholesale deal to my NJ LLC and pay the out of state taxes, or should I take the funds/profits into my NY LLC and then have that LLC pay my NJ LLC?

Sorry, I'm kind of new at this. 

Thanks.          Dave

0Reply
14 views

7 Replies

Jump to latestLatest
  • Kyle Holmes
    Attorney · Philadelphia, PA · Member since 2019 · 36 posts · 2 votes
    6y

    @Dave Pricken I don't believe it would matter because either way you'd pay NY state tax to NY LLC and NJ state income tax on the jersey LLC. I know Philly has a city wage tax for NJ residents who work here and live outside the state so that may have some bearing. Question for you. How do you find buyers for wholesale deals?

    0Reply
  • Dave Pricken
    OP
    Wholesaler · Wayne, NJ · Member since 2010 · 24 posts · 3 votes
    6y

    Thanks for the info.   Just looking to minimize my tax burden. I did a wholesale deal in NY under just my name and they hit me for almost 33% tax at closing. That reduced my take-home amount considerably. I keep a separate savings account with extra funding and pay my taxes at the end of the year, but it's nice to have that floating cash if anything good comes up.   

    I have always found that if you really have a great deal to sell, the buyers come out of the woodwork. Seems most wholesalers don't "earn" their share and just offer marginal deals that other investors could pay retail off the MLS for.

    0Reply
  • Basit SiddiqiBusiness Member
    Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
    6y

    @Dave Pricken

    From a tax perspective - you will pay taxes in NY and get a credit when you file your NJ return.

    From a legality perspective - you likely want to distribute the money from the NY LLC to the member of the LLC. If the NJ LLC is the member of the NY LLC, fine. If not, have the money distributed to the member and then transfer the money to the NJ LLC.

    [email protected]917-280-8544
    Basit Siddiqi CPA4.979 Reviews
    View Page
    0Reply
  • Dave Pricken
    OP
    Wholesaler · Wayne, NJ · Member since 2010 · 24 posts · 3 votes
    6y

    @BasitSiddiqi, thanks so much for your feedback, always great to get some professional advise, that's why I love Bigger Pockets, people willing to help.

    I am the owner/member of both the NY and NJ LLCs, but I live in NJ. I'd like to transfer the money from the NY LLC to the NJ LLC as a "consulting fee". Can I do that between the LLC's?

    Thanks again, I really appreciate it.                Dave

    0Reply
  • Basit SiddiqiBusiness Member
    Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
    6y

    @Dave Pricken

    You can prolly make a loan from one LLC to another.

    I am not sure what the purpose of charging one LLC a fee to another? Are you trying to decrease your NY income and increase your NJ income?

    [email protected]917-280-8544
    Basit Siddiqi CPA4.979 Reviews
    View Page
    0Reply
  • Dave Pricken
    OP
    Wholesaler · Wayne, NJ · Member since 2010 · 24 posts · 3 votes
    6y

    Thanks, I don't want to make a loan, I just want to show that my NY LLC hired my NJ LLC to perform a service so I can show the income in and out of the NY LLC and have the NJ LLC receive the money as services performed.

    I know it sounds weird, but I'm just trying to limit my tax liability for the NY LLC. I know I'll have to pay the taxes either way, but I'd rather have the NJ LLC pay them.

    Thanks again for taking the time to answer.

    Dave

    0Reply
  • Kevin Blanchard
    Rental Property Investor · NJ · Member since 2019 · 66 posts · 44 votes
    6y

    @Dave Pricken you are probably better off consulting your accountant. Let me know what he says because I would be interested in the answer.

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free