International Real Estate Investing: Which State to form LLC

[Geoffrey M Hersch]

I have a pressing issue that my current CPA can’t seem to answer to my satisfaction.

I am currently in escrow on a vacant lot to build a shared fractional usage and rental home in San Jose del Cabo, BCS, MX.

There will ultimately be 4 partners in the property, possibly from different states. Two of us are from CA and one potential partner resides in Utah. The 4th unknown and TBD (reach out if you might be interested in this amazing opportunity).

I need to open an LLC immediately as the Mexico closing company is wanting that information to put the LLC as the beneficiary of the Mexico Land Trust that will own the property.

I have spent HOURS and DAYS researching the comparisons between CA LLC, NEVADA, OR DELAWARE LLCs (or any other for that matter) and cannot find a definitive answer on this.

Question: Do I open a CA LLC or an LLC in Nevada or even Delaware?? I want to minimize our foreign tax owed if that makes a difference and also reduce our annual LLC maintenance costs from what would be the $800 California Franchise Tax, etc.

Heard that even if I do a Delaware LLC, that I will need to report or file a "foreign" property/informational return or something like that that would require a CA return and thus the $800 FTB cost anyways?? Therefore, I would be double paying bother the foreign LLC costs and the CA Franchise Tax fee annually, plus the costs of the registered agent.

Needless to say I am VERY CONFUSED on how to proceed. I was told that a “good tax attorney and CPA” should have a quick and easy answer but I am not finding that as the case. Ugh!!

I am pressed to have an answer very soon on this. 

Thank you, Geoff 

[Henry Clark]

Not legal advice.

It won't matter in Mexico where your LLC is from.

If you live in California it won't matter where your LLC is, you will have to report taxes there.

If you plan to do an LLC and also future deals you might as well do in California.

If you get sued your Cal LLC will protect you no matter what state you are in.
.    
Picking an owner favorable state such as Wyoming only works if it says it will be litigated in Wyoming.   Otherwise it will occur in the state where the issue is.  

Wording? You will need to register as a foreign entity doing business in that state. If a Cal LLC and you invest in Colorado you register in Colorado as a foreign entity. You would file a tax return for Colorado.

I would be more concerned about your LLC operating agreement than which state.

Recommend you discuss with your attorney. Preferably one who works with REI.

In your operating agreement make sure to put you can decide to not distribute cash.  Your attorney can explain.  
Also put down controls if life happens to you.   Death, divorce, mental, etc.