In the event of a lawsuit or creditor claims against the properties, your personal assets would generally be protected, and only the assets owned by the LLC would be at risk.Tax Advantages: LLCs offer flexibility in terms of taxation.

What I'm trying to say is that I recommed giving us more details or if you don't want to put personal info on the internet find a in-person tax professional or accountant who is familiar with rental property taxation to determine your eligibility for deducting rental losses and ensure that you're compliant with tax regulations.

Federal taxation still applies everywhere: IRS.Would it make sense to open up some legal business entity in one of those states?

There shouldn't be double taxation because rental real estate normally operates at a tax loss.The potential time that there will be a tax consideration is when you sell the property.However, your resident state(MN) will provide you a credit for taxes you pay to a different state.This will avoid double state taxation.In general, California state taxes are higher than Minnesota state taxes, therefore, you will be paying the higher of the two state tax rates, which is California.

We then went back to retirement accounts, but this time with SOLO401Ks so we *could* leverage and *not* have to worry about UDFI Tax at all.

Find an accountant that specializes in real estate taxation and amend your return if it has already been filed.

@Neera MelwaniI recommend finding a tax strategist specializing in real estate taxation.

Mainly, capital gains tax at 15%.

@Thomas TalbertI recommend finding a tax strategist specializing in business taxation and business tax planning.

Competent means someone experienced with real estate (the most critical part) and with NM state taxation.