Best state to incorporate LLC & taxes for foreign investors

[David Bates]

Hi All,

Merry Christmas!

I'm a British expat working in China and have been looking for a way to improve on the poor returns I've seen in China and Europe recently. Some US rental markets do look very attractive, such as Memphis, Detroit, Indiana, Jacksonville, maybe Austin. However, before I even look at that, I'll need an LLC to collect my income. I could maybe put in 300k of my own and finance some more through financing on those properties.

From what I understand, as a foreigner we pay 30% federal income tax on rental income, but via an LLC, we can deduct the same expenses as a local investor off the income, if we file a tax return. Apparently, we may be able to lower it depending on the taxation treaties our countries have with the US (I have a Belgian and British passport, so need to do some digging)

With that in mind, if I end up owning a number of rental properties across the country, which state am I best off putting my LLC in? Do I pay additional state tax on top of federal income tax based on what state my property is in or does it depend on where the LLC is? Should I have an LLC in every state I own a property in?

Thanks for taking the time to answer!