Is it Wise? Out of State LLC for Baltimore Property

[Candace Noel]

I'm looking to purchase my first rental property in Baltimore very soon (like a couple of weeks). The property does not need any work (just carpet). I am nervously excited. Do you think it is wise to purchase the property for CASH via an out of state LLC or should I register a new MD LLC? I think I recall reading somewhere that out of state LLC's get taxed higher. Or out of state owners in general get taxed higher/pay more fees. Does anyone know if what I recall is true? I have plenty of family in Maryland that are willing and able to register the LLC and partner with me, if necessary. Thanks!

Side note: the property is located in the Coldstream - Homestead - Montebello (21218) neighborhood. Does anyone know if that is a good location to attract tenants? Property has 3 bedrooms 1 1/2 bathrooms. 

[Ned Carey]

@Candace Noel In MD and most other states if you do business in the state then you are required to register the company with MD as a "Foreign" company. The cost is the same for in state companies and out of state companies.  no you are NOT taxed higher as a Foreign company. 

In addition to registering you need to pay $300 a year to maintain it. Again it is the same for in and out of state companies. 

My guess is what you are referring to is that when selling any out of state owner is subject to a withholding tax - about 7.5%???  This withholding is NOT a tax it is just withheld and used as a credit against any tax you might owe on the sale ie: capital gain.  If it is not needed to cover the taxes it will be refunded, although you will have to file a return to get it back. 

Bottom line I see no reason NOT to create a new LLC specifically for holding MD properties.

As far as Coldstream Motebellow the area varies from OK to horrible.  I was just on Homestead today.  each street is different. In general the lower the address number the better.  For example the 700 block is better than the 1700 blk.  if you are on the numbered streets the higher the number the better. 28th street is not as nice as 32nd street.