Legal Question in Real Estate Law in California

Re: California Real Estate Law

Howdy:

Obviously, the income produced by the California real estate would be subject to income taxes.

The easiest way to insulate the income, and the liability, is to set up a business entity (llc, limited partnership, or a combination) which would own and operate the properties.

You may want to even consider a multi-jurisdicational entity ... a Nevada LLC that is the general partner of a California limited partnership. Then, have the limited partnership own the property.

It's best to avoid a California corp or LLC, as the minimum franchise tax is $800.

rkr

Re: California Real Estate Law

Forming a Nevada entity to do business in California will only subject the entity to both Nevada and California franchise taxes.

If you are dealing with other people's money, you owe a duty to them to become much more sophisticated about applicable law before investing a penny.

Among other things, if your entity is investing for others, it is possible that your entity and not the individuals who have placed money with you will be the target of U.S. and California taxation.

I have seen well-structured transactions in U.S. real property by offshore (e.g., Manx) trusts using California limited liability companies as the U.S. owner, local professionals as managing members and the offshore trust as the income beneficiary. This is only a suggestion; there are other possibilities and the tax burdens are manageable if the deal is structured by full-time professionals and not by hearsay and speculation about the tax consequences.

Re: California Real Estate Law

No. Holding an interest in investment property in CA will no subject a foreigner to American taxes on all of their income. No one making such investments should be doing this without legal counsel.