Should my LLC be in the state my rental is in

Question

Hey guys! I am buying a rental down in Louisiana and was wondering if I should open an LLC in the state of LA or is my home state fine? Is it advisable to use an LLC that owns a short term rental condo?

Jason Marino · Answer

Hi Jake,

An LLC that owns property is normally considered doing business in the State that it owns the property in. As a result, the LLC will need to be formed in that State or registered as a foreign LLC to do business in that State if it was formed in another State. If you do not do this, there is a risk of fines, and, worse than that, if the LLC is involved in a law suit, it can be invalidated for not being registered to do business in the State. This would remove a large benefit that an LLC can provide with its limited liability protection.

Clint Galliano · Answer

@Jake Stuttgen, @Chris Levarek & @Jason Marino pretty much nailed it.

If your property is going to be owned in an LLC, it will either need to be a Louisiana LLC (domestic), or if held in an existing out of state LLC, said out of state LLC will need to be registered in Louisiana as a foreign legal entity.

**Disclaimer: I do not play an attorney on the internet nor did I sleep in a Holiday Inn Express last night. Please consult your own attorney or one appropriate for the jurisdiction you are operating in.**

Chris Levarek · Answer

@Jake Stuttgen Depends why you need an LLC?

Yes if you want liability protection.

An LLC is either foreign or domestic in the state. It depends on the state on how they tax, regulate such entities.

Both will still need a registered agent local to the state.

Always comes down to liability and the amount you are willing to risk losing in case of a lawsuit.

This also comes into play when you start adding properties to same LLC. As your value or networth or equity increases, the more LLC's per property you will want.

Rule of thumb I have used, equity under $500k, keep to 1 llc.

Example. 2 duplexes = $200k in equity, keep to 1 llc

Example 5 duplexes = $600k in equity, perhaps 2 LLC's.

Todd Goedeke · Answer

Contact an experienced RE tax attorney for advice. You will notice no tax attys. Give out free advice.

Lisa Marie · Answer

Whichever state you registered the LLC, you will have to maintain all the legal paperwork and pay fees to the state. Then whichever state the LLC is operating in, the LLC will have to register with that state as a Foreign entity if the LLC is not originally registered in the state. So if you set up the LLC in State A to own a rental in State B, you have to do everything twice.

Kate Barry · Answer

Good question!  Following...

Should my LLC be in the state my rental is in

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