Benefits of Investing in 0 Income Tax States?

[Ryan Stover]

I haven't found much direct info on the benefits of investing in properties located in states like Texas, Washington, and Nevada. I assume there must be positives even though I am a resident of CA.

Would REI in these tax-free states help me somehow? I'm planning the formation of a Series LLC, probably located in TX or DE.

Thanks all. Working to build slowly but surely in 2020.

-Ryan

[Todd Rasmussen]

Originally posted by @Ryan Stover:

Originally posted by @Natalie Kolodij:

Just so we're clear. 

You're taxed based on where your income is earned - LLC location doesn't impact taxable income

Above, David says you pay income tax where you live, even if your LLC and your properties are located in different states. That would make sense, but are you saying I'm clear of income taxes here in CA because my properties incurred 0 income tax?

Natalie is correct and this will be the only time in my life I get to add something to one of her posts, so I'm taking advantage.

You pay state income in the state where you earn income. Because CA, (redacted for triggering Californians) the Franchise Tax Board makes you pay tax on foreign income streams at your CA income tax rate and then gives you a credit if you actually had to pay another state tax on that income. So in zero income states you still end up paying CA income tax. Best coast my a$$.