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Need help with out of state LLC

Asked by: Kay  — 30 June, 2012

I reside in GA. I own rental property in IN (which generates income) and land in FL which does not generate any income (I just pay taxes on it). I would like to put all of the properties under one LLC located in GA. Is that possible? Or do I have to create separate LLCs in each state where each property is owned? Or do I only have to do it for the income generating property?

Answered by: admin  — 30 June, 2012

Dear Kay,

As a rule of thumb, each income-bearing rental property should be organized under its own LLC. The reason it to limit its liability to itself and thus separate it from your other assets.

Also, typically you would need to use an LLC organized in the state where this property is located (in your case IN), or foreign qualify your LLC in that state, if it was organized in a different state. The reason is the fact that your property is, in essence, a business that is “doing business” in that state.

Land, on the other hand, is a passive asset, not bearing income and probably carrying very little liability (its up to you to analyze the potential liability of owning this particular plot, but in my opinion there should be little to none). As such you can probably own it with an out-of-state company without the immediate need to register this LLC in the state where the land is physically located. If you ever plan to sell, develop, or lease this land you would need to foreign qualify the company that owns it in that state.

So in your case I think you could register an LLC in Georgia, transfer the title of the Florida land to this LLC, and then register an Indiana LLC to be owned by the Georgia LLC, and transfer the title of your Indiana-based property to this Indiana LLC.

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