LLC by State Comparison: Best States for Rental Property LLCs

Every state has an LLC statute, but they are not remotely equal. Annual fees range from $0 (New Mexico) to $800+ (California). Privacy protections vary from full member disclosure in public records to no disclosure required. Charging-order protection for single-member LLCs is strong in four states and essentially nonexistent in several others. Series LLC recognition covers about a third of states.

For DSCR loan investors, choosing the right state to form each LLC is a real financial and legal decision — not just an administrative formality. This guide gives you the comparison data you need to make it correctly.

The Core Framework: Property-State vs. Out-of-State Formation

Before comparing individual states, understand the decision tree:

Property-State LLC (recommended for property-level entities):

• Form the LLC in the same state as the property
• No foreign LLC registration required in the property state
• Cheaper and simpler at the property level
• Local title companies and attorneys are familiar with the setup

Out-of-State LLC (for holding companies only):

• Wyoming, Delaware, or Nevada holding company that owns property-state LLCs
• Adds privacy and charging-order protection at the ownership level
• Requires foreign registration if that holding company “does business” in the property state
• Makes sense at scale (3+ properties) when holding-company benefits justify the cost

The “Tax Haven” LLC Myth

A persistent myth: forming your rental LLC in Wyoming, Nevada, or Delaware saves you taxes on rental income. It does not.

Rental income is taxed where the property sits. A Wyoming LLC owning a Florida rental pays no Wyoming income tax — but the individual investor pays federal income tax on their Schedule E, and Florida has no state income tax regardless. That’s a Florida advantage, not a Wyoming advantage.

What out-of-state formation does affect:

• Annual compliance cost (where you file reports and pay fees)
• Privacy (what’s disclosed in public records)
• Charging-order protection (outside-creditor defense)
• Series LLC availability (whether you can use cells)

It does not affect: federal income taxes, property state income taxes on rental income, property taxes, or transfer taxes.

State-by-State Analysis

Wyoming

Filing fee: $100 (online: $60) Annual fee: $60 minimum (or $0.0002/dollar of Wyoming assets — usually just $60) State income tax: None Charging-order protection: Strong — explicitly extends to single-member LLCs by statute Privacy: High — member/manager names not required in public filings; file through registered agent Series LLC: Yes — Wyoming Series LLC statute available Publication requirement: None Best use: Holding company above property-state LLCs; primary entity for investors prioritizing privacy and charging-order protection

Why Wyoming wins for holding companies: It’s the most cost-efficient combination of privacy, single-member charging-order protection, and no state income tax. The statute is mature (Wyoming passed the first US LLC law in 1977). Annual cost all-in: under $250 including a registered agent.

Why Wyoming is wrong for property-level LLCs outside Wyoming: Registering a Wyoming LLC as a foreign entity in the property state costs $50–$750 in additional filing fees plus an extra annual report. You pay Wyoming’s $60 plus the property state’s foreign-registration cost — more expensive than just forming locally.

Best for: Scaling investors with 3+ properties using a holding company structure; foreign nationals building a US entity stack; high-net-worth investors prioritizing charging-order protection.

Delaware

Filing fee: $110 (Certificate of Formation) Annual fee: $300 franchise tax (flat, regardless of income or assets) State income tax: None for out-of-state investors with no Delaware nexus Charging-order protection: Strong by case law; Court of Chancery has robust case history Privacy: Moderate — management required to be disclosed, but beneficial ownership less required Series LLC: Yes — the original Series LLC statute (1996); most mature case law Publication requirement: None Best use: Institutional investors, anyone planning to raise outside capital, sophisticated multi-entity structures where Court of Chancery access matters

The Delaware premium: Delaware costs $300/year in franchise tax versus Wyoming’s $60. For an individual investor with a single holding company, that’s $240/year more with no practical benefit over Wyoming. Delaware shines when you’re structuring for institutional investors, venture capital, or eventual REIT conversion — scenarios that don’t apply to most DSCR borrowers.

Best for: Institutional investors, fund structures, sophisticated entity stacks where Delaware court access matters, and anyone comfortable paying the premium for Delaware’s brand recognition.

Nevada

Filing fee: $75 initial registration Annual fee: ~$350 (business license + annual list fee — Nevada requires an annual business license for all entities) State income tax: None Charging-order protection: Strong — explicitly extends to single-member LLCs; statute says charging order is the exclusive remedy for creditors Privacy: High — Nevada does not share information with the IRS voluntarily (legal but often overstated in marketing); no public member disclosure required Series LLC: Yes — Nevada Series LLC statute available Publication requirement: None Best use: Privacy-focused investors who value the “exclusive remedy” charging-order language and don’t mind slightly higher annual fees than Wyoming

The “Nevada doesn’t share with the IRS” marketing: This is a real statutory provision but largely irrelevant in practice. Regardless of where your LLC is formed, you owe US taxes, file US returns, and the IRS has its own enforcement mechanisms. The privacy from public records searches is real; the suggestion that Nevada formation reduces tax compliance obligations is not.

Cost comparison vs. Wyoming: Nevada costs ~$290 more per year than Wyoming. For most investors, Wyoming’s $60 annual fee is the better choice. Nevada makes sense if you specifically want the statutory “exclusive remedy” language or have existing Nevada business relationships.

Best for: Privacy-focused investors, those who specifically want Nevada’s exclusive-remedy charging-order statute, investors already operating in Nevada.

Texas

Filing fee: $300 (Certificate of Formation for domestic LLC) Annual fee: Franchise Tax report (but no-tax-due threshold is $2.47M revenue — most small rental LLCs owe nothing; they just file a No Tax Due Report) State income tax: None Charging-order protection: Good by statute Series LLC: Yes — Texas Series LLC statute, very active usage, strong case law development Privacy: Low — Texas requires name and address disclosure for all members and managers (though you can use a registered agent address) Publication requirement: None Best use: Property-state LLC for Texas properties; the best state for Series LLC for Texas-concentrated portfolios

Texas Series LLC: If your entire portfolio is in Texas, a Texas Series LLC is a legitimate cost-saving structure. One master filing at $300, individual cells created through the operating agreement, each with its own EIN and bank account. See our Series LLC guide for the complete framework.

Why Texas is not a “privacy” state: All member and manager names and addresses must appear on public Texas SOS filings. For investors who want to keep their name out of public searches, Texas is not the right holding-company state. Many Texas investors use a Wyoming holding company to maintain Texas-property LLCs (which are required in Texas), getting the cost efficiency of local registration with the privacy of Wyoming ownership.

Best for: Property-state LLC for Texas properties; investors concentrating 5+ properties in Texas who want Series LLC cost savings.

Florida

Filing fee: $125 Articles of Organization Annual fee: $138.75 annual report State income tax: None (Florida has no individual income tax) Charging-order protection: Weak for single-member LLCs — the Olmstead v. FTC (2010) Florida Supreme Court case held that a charging order is not the exclusive remedy for single-member LLC creditors; courts can order a foreclosure on the membership interest Series LLC: Not recognized Privacy: Low — annual reports require manager/member disclosure with names and addresses Publication requirement: None Best for: Property-state LLC for Florida properties; pair with a Wyoming holding company above the Florida LLC to get charging-order protection at the ownership level

California

Filing fee: $70 (Articles of Organization) Annual fee: $800 minimum Franchise Tax + gross-receipts fee above $250K gross receipts State income tax: Yes — California taxes rental income at rates up to 13.3% Charging-order protection: Good by statute (California revised its LLC Act to clarify this) Series LLC: Not recognized by California Privacy: Low — Statement of Information requires member/manager disclosure Publication requirement: None (unlike New York) Best for: California properties (you have no choice if the property is in California)

The $800 trap: California’s $800 minimum Franchise Tax applies to every LLC “doing business in California” — including foreign LLCs. If your LLC holds California rental property, it owes $800/year regardless of where it was formed. You cannot dodge this by forming in Wyoming.

Never form a California LLC for out-of-state properties. The $800/year serves no purpose for property outside California.

New York

Filing fee: $200 (Articles of Organization) Annual fee: $200 biennial report (every two years) State income tax: Yes — New York City adds an additional layer Charging-order protection: Good by statute Series LLC: Not recognized Privacy: Low — publication requirement makes member names semi-public Publication requirement: Yes — new LLC formations must publish notice in two newspapers for six consecutive weeks, chosen by the county clerk. Cost: $300–$800 (upstate) to $1,000–$2,000 (NYC counties). Failure to publish results in the LLC’s authority to do business being suspended. Best for: New York properties (mandatory — foreign LLCs doing business in NY face the same requirements)

The NY publication trap: The newspaper publication requirement is a one-time cost per LLC, but it catches every first-time New York investor off guard. Budget $1,500–$2,500 for a Manhattan-county LLC formation including publication. Use a registered service that packages LLC formation with publication coordination — don’t try to arrange it yourself.

New Mexico

Filing fee: $50 (Articles of Organization) Annual fee: $0 (no annual report required for domestic LLCs) State income tax: Yes (3.9% flat rate) Charging-order protection: Good by statute; case law is developing Series LLC: Not recognized Privacy: High — New Mexico is a “true anonymous LLC” state; no member or manager disclosure required in any public filing. Even the initial Articles of Organization don’t require member names. Publication requirement: None Best for: Privacy-focused investors who want the cheapest anonymous LLC; an alternative to Wyoming when cost is the primary driver

New Mexico’s hidden gem status: New Mexico has the lowest combined cost (zero ongoing annual fees, just $50 formation) and strongest privacy (no member disclosure anywhere in public records). The tradeoff: no single-member charging-order protection (the statute is newer and less tested), and New Mexico is less recognized by attorneys and lenders than Wyoming. For a secondary holding company or an anonymity play, New Mexico is worth knowing. For primary holding company structure, Wyoming remains the better-tested option.

Massachusetts

Filing fee: $500 (Certificate of Organization) Annual fee: $500 annual report State income tax: Yes — 5% flat rate Charging-order protection: Good Series LLC: Not recognized Privacy: Low Publication requirement: None Best for: Massachusetts properties; avoid for out-of-state formation (highest flat annual fee in the country)

Illinois

Filing fee: $150 (Articles of Organization) Annual fee: $75 annual report State income tax: Yes — 4.95% flat rate Charging-order protection: Good Series LLC: Yes — but Illinois has an unusual statute where each series files separately with the state and has its own public record, unlike other series states where cells are created entirely internally Privacy: Low Best for: Illinois properties; Illinois Series LLC for Chicago-area concentrated portfolios (note the separate-filing requirement)

Summary Comparison Table

Recommended Structure by Portfolio Stage

First Property (Single State)

Form the LLC in the property state. No holding company needed yet. Keep it simple and avoid double registration fees.

2–3 Properties (Single or Two States)

Consider adding a Wyoming holding company at property #2 or #3. The incremental cost ($250/year) is low, and you gain privacy, single-member charging-order protection, and estate-planning flexibility without disrupting existing LLCs.

4–10 Properties (Multi-State)

Wyoming holding company is established. Each new property gets a property-state LLC. All property LLCs are owned by the Wyoming holding company. Optional: revocable living trust above the holding company for probate avoidance.

10+ Properties (Single Series-Friendly State)

If your portfolio concentrates in Texas, Delaware, or Wyoming, evaluate whether a Series LLC reduces compliance costs enough to justify the transition. See Series LLC guide for cost math. Keep DSCR lender acceptance in mind — about 60% of lenders decline series LLCs.

What Changes With FinCEN’s BOI Rule

The Corporate Transparency Act’s Beneficial Ownership Information (BOI) reporting requirement originally took effect January 1, 2024. Following multiple federal court injunctions and a FinCEN interim final rule issued in March 2025, the reporting requirement for domestic US reporting companies and their US beneficial owners was removed — only foreign-formed entities registered to do business in the US remain subject to BOI filing as of the current rule. Status remains subject to further regulatory and legislative change; confirm the current requirement with your attorney before relying on either outcome.

Key implications:

• If you form a domestic Wyoming/Delaware/New Mexico/state LLC, no BOI filing is currently required under the March 2025 interim rule
• Foreign-formed entities registered in the US (e.g., a Cayman or BVI entity registered as a foreign LLC in a US state) still must file BOI
• Public-records privacy in Wyoming, Nevada, New Mexico, and Delaware is unaffected by BOI status — those states still hide your name from public searches, which is the practical value (plaintiffs’ attorneys searching property records)
• The policy environment is fluid — expect further rulemaking or legislation on BOI scope; re-check before forming multi-entity structures

For a detailed breakdown of entity structures and lender acceptance, see the Entity Structure LLC Guide. For the asset protection rationale behind multi-LLC structures, see the Asset Protection Master Guide.

Ready to Structure Your Portfolio?

Use our DSCR Calculator to model the cash flows that will flow through these entities, and the Portfolio DSCR Analyzer to stress-test the full picture. When you’re ready to apply, get matched with DSCR lenders who are familiar with holding company and series LLC structures.

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