Entity structure for out of state LTRs

[Lor Fara]

I live and work in CA, but looking to invest in OH and IN. I have two LLCs set up, one in WY one in CA, both under a WY holding LLC. Can I buy rental properties in OH and IN with my WY LLC? In which states would I have to file tax returns?

[Sean O'Keefe]

Quote from @Katie Balatbat:

@Lor Fara

Generally, CA residents are taxed on worldwide income, meaning all of your income earned in any state will be taxed in CA if a resident.  But, there is a credit available for taxes paid to other states to deduct from your CA tax bill to somewhat avoid double taxation.  Note that CA tends to have higher tax rates so if CA taxes $10k of rental income sourced in Ohio at a 9% rate, but you only paid, say, 4% to Ohio, maybe you'll get a credit for the 4%, but you're likely still paying the 5% differential to CA.  Generally, you'll also need to follow the state income tax rules of any state where you earned income, and those rules vary state-by-state of course.  Absolutely the first stop in your series of questions would be to ask your tax advisor for advice specific to your situation.  The answer will be dependent on your fact pattern, so a general forum like this may not be able to answer such a broad question.

With regard to the LLC structure, note that CA does not recognize series LLCs, and CA tends to have a broad opinion of what constitutes "doing business" in the state, and therefore, what LLCs need to report with the CA Secretary of State and file appropriate tax returns. While a general rule is that you can purchase property in different states under an LLC formed in another state, you may wish to ensure that the LLC structure and path that you have set-up is appropriate for you and provides the benefits that you are looking for before transferring ownership into those LLCs.

*This post does not create an attorney-client or CPA-client relationship.  The information contained in these posts is not to be relied upon.  Readers are advised to seek professional advice.

Good feedback here from @Katie Balatbat