​Living in CA, own rentals in OR with sister. Where to form LLC?

[Jon Lee]

I live in California. My sister lives in Oregon. We own rental properties in Oregon. We want to setup a LLC in Oregon for the properties, but do I need to also setup a California LLC and/or pay the $800 LLC tax in California?

My sister manages everything. If we set up a LLC partnership agreement where she has all decision making authority, can we get by with just the Oregon LLC?

[David M.]

@Jon Lee

Yes, you need the LLC to be formed or registered in the State where the property resides. Otherwise, the LLC will have no legal standing in that State since they are legal entities formed by a State.

As I understand it, CA will want to charge you $800 /yr regardless of where your LLC's are located. Sorry. But, you don't need a separate CA LLC.

Not sure how you'd be avoiding a partnership return. With two members of the LLC, it will be taxed as a partnership unless you elected something different, which wouldn't be to your advantage anyway. Other than providing limited liability protection, the LLC is also allocating your profit/losses to you individual returns. I assume you two are jointly holding Title which basically gives you a 50/50 split.

Does that make sense?

Otherwise, you'll need to consult a qualified professional or two.