Do I need to register my real estate LLC in my home state?

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Question:

“In your best state to form an LLC article, you mentioned that for real estate investments, it makes more sense to register your LLC in the state where your investment property is located in. However, won’t you still need to register your LLC as a Foreign LLC in your home state? If so, how is a real estate investment related LLC different from any other LLC where you say registering at your local state is cheaper? Thank you.”

Answer:

Unless you’re in California, most people don’t need to register their LLC as a foreign LLC in their local state, aka, their home state.

You’ll just form a domestic LLC in the state where the property is located.

It comes down to where you’re “doing business”. For real estate LLCs, the state where they are doing business is that state where the property is located.

The exception to the rule is California, where they have extremely strict rules about the definition of “doing business”. If you reside in California, you can form an LLC in California and register it as a foreign LLC in the property state, form an LLC in the property state and register it as a foreign LLC in California, or form an LLC in California (domestic) and an LLC in the property state (also domestic), however the California LLC owns the property state LLC.

And for those who are reading who want to buy real estate in their home state, then you don’t have to worry about all this. It’s just one LLC formed in your home state.

Matt Horwitz
Founder & Educator, LLC University®
Forming an LLC shouldn't be so complicated. Our step-by-step guide will make the process a breeze – and no complex legal jargon! LLC University® teaches people how to form an LLC for free in all 50 states. We hope you find our free guides and resources helpful in your business journey.
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2 Comments

  1. Michael February 28, 2019

    I formed an llc in Idaho. The purpose of the llc is for liability protection on a residential rental property i own in state. I live in Alaska, and want to open a business bank acct for my new Idaho LLC at my local Alaska bank. The bank requires a business license from Idaho. I am not required to have a business license for this situation, either by the state of Idaho, or from the city or county. I can’t even get one if I wanted to. What do I tell my banker who insists I have one before he’ll open a business acct?

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    • Matt Horwitz February 28, 2019

      Hi Michael, this happens often. Bankers aren’t usually super knowledgable about LLCs. You can tell them that unlike Alaska, Idaho doesn’t have a statewide business license requirement for LLCs. No such thing exists. Additionally, I’d ask to speak the branch manager to see if you can straighten things out. If you still get push back, the only other option is to go to another bank. Good idea to call around ahead of time to make sure they can open an account for an Idaho LLC. Hope that helps.

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