Attorney recommendation in Southern California with TX experience
Member since 2019 · 6 posts · 0 votes
Hello all,
I’m a new real estate investor in Southern California looking for a lawyer with specific experience working with clients who own real estate in Texas. I turn to you, the tried and trusted BP community! Please feel free to comment or PM me with your connections. Much appreciated.
Are your entities going to be TX entities or CA entities? If TX entities, you probably want to find a TX attorney. If CA entities, you probably want to find a CA attorney. Though, for your CPA, you would want someone well versed in CA taxes since TX has no income tax and CA tends to be one of the more complex tax states.
California is a sort of beastly state when it comes to taxes and filings. Even if you create a non-CA LLC, if you are managing the business from California, you will be deemed to be "doing business" in California and therefore subject to CA taxes. California charges a minimum tax of $800 a year per LLC, and more if you have gross receipts in excess of $250k. So, if you create an LLC in another state, you will need to register it as a foreign LLC in California. Though, this process will be the same for the other state (if you created a CA LLC you will need to register it as a foreign LLC in the state in which you are doing business/holding property). This means that you will need to pay registration and filing fees in at least 2 states if you don't buy CA property.
Most likely the state where the property is located is where lawsuits would be brought if they are something for personal injury like a trip and fall or something of that nature because the “cause of action” arose in that state.
California tends to have more laws on the books and requirements and restrictions that it can be a good idea to form a CA LLC for out of state property so that you as a CA resident are covered, and to try to have your contracts fall under the purview of CA courts. It also is helpful to have a California LLC in case you ever sell that property and move into another state so that you do not need to form a new LLC altogether with new operating agreement, just re-register in the new state as a new foreign LLC. But, that is not always the right answer and you should speak with someone familiar with your personal situation to get advice specific to you.
*This post is informational only and is not to be relied upon. Readers are advised to seek professional advice. This post does not create an attorney-client or CPA-client relationship.
@Jerel Ehlert
Thanks for responding Jerel! To be more specific, a friend and I live in CA and going to begin real estate investing in TX. We would like to work with an attorney and tax specialist who focus on out of state real estate investing so we can setup our corporations correctly, establish the correct partnership structure, and ensure we minimize our tax exposure from the onset.
Thanks again!
Are your entities going to be TX entities or CA entities? If TX entities, you probably want to find a TX attorney. If CA entities, you probably want to find a CA attorney. Though, for your CPA, you would want someone well versed in CA taxes since TX has no income tax and CA tends to be one of the more complex tax states.
California is a sort of beastly state when it comes to taxes and filings. Even if you create a non-CA LLC, if you are managing the business from California, you will be deemed to be "doing business" in California and therefore subject to CA taxes. California charges a minimum tax of $800 a year per LLC, and more if you have gross receipts in excess of $250k. So, if you create an LLC in another state, you will need to register it as a foreign LLC in California. Though, this process will be the same for the other state (if you created a CA LLC you will need to register it as a foreign LLC in the state in which you are doing business/holding property). This means that you will need to pay registration and filing fees in at least 2 states if you don't buy CA property.
Most likely the state where the property is located is where lawsuits would be brought if they are something for personal injury like a trip and fall or something of that nature because the “cause of action” arose in that state.
California tends to have more laws on the books and requirements and restrictions that it can be a good idea to form a CA LLC for out of state property so that you as a CA resident are covered, and to try to have your contracts fall under the purview of CA courts. It also is helpful to have a California LLC in case you ever sell that property and move into another state so that you do not need to form a new LLC altogether with new operating agreement, just re-register in the new state as a new foreign LLC. But, that is not always the right answer and you should speak with someone familiar with your personal situation to get advice specific to you.
*This post is informational only and is not to be relied upon. Readers are advised to seek professional advice. This post does not create an attorney-client or CPA-client relationship.
I don't practice in CA, but if the properties are in TX, then you will probably want TX entities. Even though foreign (non-TX) entities can own property, lease it, etc. - and BE sued - without registering in TX, they cannot sue or bring claims. Evictions are lawsuits. That means your CA entity cannot file evictions without having to register in TX.
Also, TX only charges $300 for a one-time charge to form an LLC. Thereafter it is an annual franchise tax on gross receipts margin over $1,000,000 (I think, was recently raised and typically not an issue). There is no state income tax, yet.