I run a small landscaping business and I set up an LLC in New Mexico last year because of the privacy and no franchise tax. Now I'm looking at buying a piece of land in Texas for equipment storage and maybe a future office. Can my NM LLC hold title to Texas real property directly, or do I need to register it in Texas first? I want to avoid double filing fees if possible.
LLC
Can a New Mexico LLC own property in Texas?
You'll need to register the LLC as a foreign entity in Texas before it can own property there. That means filing an application for registration with the Secretary of State and paying the fee. New Mexico is fine for formation, but Texas will treat you as a foreign LLC doing business in the state if you own real estate.
plainsight is right.I did this exact thing a few years back. Filed the foreign LLC registration in Austin, got a certificate of account status, and then the title company was satisfied. Cost was around $750 if I remember correctly, plus a registered agent in Texas.
Does it matter if the property is just vacant land vs. a building? Im in a similar spot but mine is raw acreage.
Owning any real property in Texas generally counts as doing business, so the registration requirement is the same whether its vacant land or improved. The LLC's name also has to be available in Texas, which is another step people forget.
Okay that makes sense. So if I register in Texas, do I then have to file annual reports or pay franchise tax there too? Thats the part I was hoping to avoid.
Yes, Texas has an annual franchise tax report, and you'll owe the no-tax-due report if you're under the threshold. It's not free, but it's manageable. The bigger issue is keeping your registered agent active and updating the state when things change.
Franchise tax in Texas for a small LLC is often just the $0 report if you're under the $2.47 million threshold. But you still have to file. There's a $50 penalty for late reports.
I'd also check with a Texas attorney before you buy.There might be title or conveyance issues if the LLC isn't registered at the time of closing. Some title companies are picky.
Any idea if you can just transfer the property to a Texas LLC later and dissolve the NM one? That might be cleaner.
Transferring real estate between LLCs triggers deed transfer taxes and possibly a new title policy. It can be done but it's not free. Better to decide the structure before you buy.
One more thing: if you finance the purchase, the lender may require the LLC to be registered in Texas and may also require a personal guaranty. The NM entity alone won't satisfy most banks.
I'm paying cash so no lender. But the title company point is good to know. I'll call the one I used before and ask what they need
Good call. Also make sure your NM LLC is in good standing before you file the Texas application. They'll ask for a certificate of good standing from New Mexico.
And the Texas SOS website has a name availability search. Run your LLC name through it first. If it's taken you'll need to add a dba or use an assumed name tbh.
Just curious, why did you go with New Mexico in the first place? Texas LLCs are pretty easy to set up.
Privacy mostly. New Mexico doesn't require member disclosure. But now I'm realizing that if I register in Texas, I might lose some of that privacy anyway. Still weighing it.