LLC owns of Properties in another state affecting income taxes

[Ryan Paonessa]

Hi bigger pockets friends!

I own two rental properties currently held as a sole prop under a dba in Michigan. I recently moved to Arizona and I want to put the properties into an LLC in order to add the legal protection and to remove the mortgages from my personal finances. The goal would be to seek commercial financing and deed the properties to the newly formed LLC.

My questions are should I form the LLC in Michigan to avoid the foreign LLC registration and since the LLC is a pass-through entity for tax purposes, am I then paying income tax in Michigan and Arizona? Thanks in advance for the help!