My partner and I have a small LLC registered in New Hampshire. We're looking at buying a vacation rental property in Maine. Is it legal for the NH LLC to hold title to the property, or do we need to register the LLC in Maine as a foreign entity? Anyone done this?
Real Estate
Can a New Hampshire LLC own a vacation rental in another state?
You can hold title in another state, but yoou'll almost certainly need to register the LLC as a foreign entity in Maine. That means a registered agent there and annual report filings. It's not a huge deal but adds cost.
What coastal_poppy said. We did this for a property in Vermont and had to file a foreign registration. The LLC stays a NH LLC, but Vermont requires it to be authorized to do business there.
Does owning a rental count as 'doing business' in Maine? I've read some states are picky about that. If you're just collecting rent, maybe you don't need foreign registration?
Most states consider owning and renting property as doing business. Maine is pretty clear about it. Better to register and not get fined later.
Talk to a lawyer in Maine. It's worth the few hundred bucks to get it right. We used an attorney for our out-of-state purchase and it saved us from a mess with local taxes.
Also think about where the proprty is titled. Some lenders won't lend to an LLC. If you're financing, you might need to buy it personally and then transfer to the LLC, which can trigger due-on-sale. Just a heads up.
We're paying cash, so no lender issue. But the foreign registration thing seems unavoidable. What about taxes? Does Maine tax the LLC's income?
Maine will tax income sourced from the rental. You'll likely need to file a Maine nonresident return. The LLC might also have to pay the state's annual report fee. It's not free but manageable.
I looked into this for a property in NH once (I'm in Mass). The foreign registration was requird, but the annual fee was small. The bigger pain was the registered agent service.
One more thing: if the property is in a different state, your NH registered agent won't be sufficient. You'll need a Maine registered agent. Some companies bundle it with the foreign registration service
Has anyone actually done the foreign registration themselves? I'm wondering if it's DIY-able or if it's better to use a service.
I did it for a rental in Florida. The forms were online and straightforward, but I messed up the first time and had to refile. If you're comfortable with paperwork, go for it.
I'd second DIY if you're patient. But if you're unsure, a service or a lawyer is worth it. The penalties for not registering can be nasty.
Appreciate the specifics on the registered agent and tax filing. We'll probably use a service for the initial registration and then handle annual reports ourselves.
That sounds like a reasonable plan. Just keep good records of the Maine income and expenses. The state will want its cut.