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Currently have a CA LLC - should I open a new LLC for TX property

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Hi Bigger Pockets Family,

I currently live in CA and own a duplex in a CA domestic LLC. However, I'll be buying a few rental properties in TX, and I'm not sure whether or not I should open a new TX domestic LLC (and subsequently register it as a CA foreign LLC because of my CA residency), or if I should just register my current CA LLC as a foreign entity in TX.

Here are my thoughts, and I know it’s ultimately a question for an attorney or tax professional, but I’d love to get your all’s opinion on it. 

My thinking is that if I continue to use my CA-based LLC for TX investments, then the capital gains on my TX properties will inevitably be taxed in CA (even if I no longer live there in 10 years) because the business is based in CA. However, holding my TX properties in a TX-based LLC would only subject me to capital gains on the sale of properties if I'm still a CA resident at that time. For that reason, it'd be better to setup a new TX-based LLC purely for TX properties.

I don’t know where I’ll be living in 10-15 years (when I’d consider selling anything), but it very well might not be CA.

THANK YOU!


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77
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34
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Lee Judd
  • Lender
  • Logan, NM
34
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77
Posts
Lee Judd
  • Lender
  • Logan, NM
Replied

LOL They get you coming and going over there. Guess that's why there is a mass exodus from CA to other states. 

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