Hello all,
I own a Nevada corporation, which has been anonymized so my name is not easily available to prying eyes. I want to buy a property in New York state, and have the corporation authorize me to be a tenant and property manager of the building (it’s residential). Do I need to register as a foreign corporation in New York, just because I own property there? As I understand it, the test is for more than occasional business in the state, in order to be required to file. Is a continuing real estate investment considered ongoing business? If I pay the corporation rent, does that count as business?
First off, please search the posts here on this topic, as I and others have posted extensively on it. I am firmly of the opinion that NV entities are a massive waste of resources and provide little or no extra protection or tax benefits over local entities (e.g. - NY LLC, etc) in the case of real estate located outside of NV.
The exact requirement for registration varies from state to state. The Constitution allows the states great leeway in determining what constitutes “doing business” in the state. Bear in mind that the states can bar you from enforcing contracts in their courts (like say, refusing to evict on a lease) if you are not registered there.
A corporation is almost never the right way to hold rentals from a tax standpoint. See my article on entities (on this website) for some explanation of why that is so.
I strongly suspect that you were “sold” a NV entity, and that this proposed structure was not the result of objective advice from a disinterested pofessional who was informed as to your specific facts - I see it all the time, because I get paid to unwind such structures once their uselessness becomes apparant. That’s not a cut at you, it’s friendly words of experience & caution.
John Hyre