I live in CA and my business partner in PA. We are looking to buy a 6 unit multifamily property in PA that'd come under commercial mortgage. How would we create a single purpose entity / LLC that will have only the property as asset? Should it be Delaware/ Nevada based kind of LLC that would have both me and my partner? Or create one in PA because that's where the property is? What are the ways to set one up? I am venturing into commercial mortgage space for the first time and hence this fundamental question. Thanks for being generous with your time and knowledge.
Just read an article on BP about this (can't find it at the moment). Put the property in an LLC in the state where it is located. A CPA can give you more details on why it's better for taxes that way.
Apartment Syndicator · Charleston, SC · Member since 2017 · 519 posts · 631 votes
5y
@Sudhir N. Before forming the entity, you should also check with the lender because certain lenders have requirements for which state the entity has to be formed in.
Investor · Durham, NC · Member since 2020 · 1k+ posts · 691 votes
5y
I agree with @Willie James. You should try to put the property in an LLC based in the same state. But, I'd also encourage you to consult with your tax professional, as they can advise you based on your specific situation.
Your cheapest route will be to set up the LLC in PA. This will avoid the added LLC fees / registered agent fees that would need to be paid to Nevada or Delaware.