We live in Colorado and are (finally!) under contract to purchase our first MH park! It’s in Arkansas; when we close we could claim residency in either state, since our day jobs are portable.
Currently we have an LLC for our CO multifamily property.
Should we create a new one for our AR property?
Should we create it in Arkansas or in CO?
What are the tax ramifications for living in CO vs living in AR?
Once I heard about what is supposed to be an excellent way to protect your interests in your LLC, by creating a holding LLC that acts as a partner inside the managing LLC. Does anyone have experience as to how to structure and word that type of structure effectively?
I greatly appreciate your response, SDGuy. Reading through previous posts gives me a launching place to have an intelligent conversation and make an informed decision. (Now I have some idea of what terms to do a search on for similar conversations, also! Gracias) Nothing like picking up the phone to talk to a $400 an hour lawyer and not even knowing which end of the stick to pick up, or even if there is a stick to pick up. I certainly don’t mind paying an expert to help me when I need to do so, but unless I’ve educated myself enough to know what’s going on, I do myself and the expert a disservice and waste everybody’s time.
Everyone’s situation is different so you need to speak to an attorney if you can’t figure it out with your own research. However, my opinion for me personally is:
Absolutely never put 2 properties in one LLC unless you want to lose both in case the place goes nuclear. By keeping them separate, a bad situation at 1 causes you to lose only that 1 property.
Creating the primary ownership structure in a state other than where it is located makes it more costly and cumbersome because you have to register as a foreign entity and as a domestic entity for no benefit. Chances are if you don’t know enough to know why you would register out of state, you should not do it.
For tax ramifications, you can probably google taxes in one state versus another to talk to a CPA. As an out of state owner, you may have to pay local tax in the state of the business.
Your last question is very unique to a specific situation, so I am not even going to try to provide guidance on that one. I know that our firm did not do it that way. However, given that you are on your 1st property, I wonder why you want to create extra complexity. It may be different if you are on your 100th property.