Multistate Landlord Answer
FWIW, I got a group of RE lawyers and accountants together to discuss issue of owning 30 properties in 3 states. Here's what all came up with:
1. Form one Delaware LLC for each property you own and have them qualify in the state where that property is owned; no need for 'parent' LLCs in any state Accounting, liability, tax etc issues are the same so the choice was to file where cost was lower (than NY e.g.) and body of case law was most advanced (DE for sure)
2. For shared expenses, like software, vehicle, computer, etc form a brother/sister LLC that charges each of the others 1-2% (trying to make sure its costs and revenues match so it is not a profit or cost center) to buy, own and operate shared/prop mgt expenses
3. Quickbooks for accounting. Hire local college/accounting degree intern/grad to set up/possilbly do it ongoing if it has to be outsourced, but the intial setup should have you well on your way
Hope that is helpful[ Edited by dealjunky on Date 04/01/2004 ]
Thanks for sharing.
Any idea why they recommended a Delaware Corp over a Nevada Corp? Those two are by far the most popular, and am just wondering why they favored Delaware. I thought you'd get the same benefits plus some tax benefits by going with Nevada.
I will ask. What tax advantages would there be with a NV corp? Is there a stigma associated with NV corps (distant memory from years ago)
Talked with the team again...not very familiar with NV corp/LLC ('why would you want to do that?'). Keep in mind these are a group of lawyers/accountants who typically work on $50-$500 million commercial deals - mostly development - are in the papers, etc so they are pretty focused on a narrower set of things.
To sum, I was told that any state tax advantages don't matter to NY state residents since we are taxed on worldwide income and will pay to NY any difference if another jurisdiction is less than NY +/- credits to non-US jurisdictions
Note the team's focus is also part of the problem. I can't really hit them with subject to, Illinois land trusts and landlord tenant law. They're setting up 6 month due dilly processes with tenant rep, estoppel letters, teams of HVAC and structural consultants, complex tax credit amortizations, etc. They have at least two clients that are billionaires that I know of.
Sux to be the little guy in NY, even if you can get hold of the big guy. Anyone ever been charged $725/hour for a lawyer?