Should my LLC be in the state my rental is in

[Jake S.]

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]

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.