LLC BEST ENTITY TO OWN REAL ESTATE IN PA

Elimination of Capital Stock Tax and Foreign Franchise Tax

On January 4, 2016, Pennsylvania Governor Tom Wolf eliminated the Capital Stock Tax and Foreign Franchise Tax for all taxpayers effective for tax years beginning on or after January 1, 2016. Previously, the Capital Stock and the Foreign Franchise were imposed on all limited liability companies (LLC), corporations and a few other entities that were formed or doing business in Pennsylvania. These taxes were not imposed however on an entity that was formed as a state law partnership. As a result, the limited partnership was the entity of choice to own real estate.

LLC Now Entity of Choice in PA to Own Real Estate

With these taxes eliminated, Pennsylvania joins the rest of the country with the LLC now being entity of choice for owning real estate. Keep in mind however that with while this is the law right now, there still is no budget in place. The theory is that the elimination of these taxes will spur economic development and create greater tax revenue in the long run at the cost of losing what had been declining capital stock tax revenue.

Who knows what will happen if the budget is just a little short of what is needed that the January 4, 2016 repeal isn’t tweaked to bring the budget into balance. Regardless, this is the law as it stands today and we are here to advise you of the best way to invest in real estate while protecting your assets and giving you the most flexible management choices that are available. If you have any questions, please feel free to contact Doug Leavitt at Danziger Shapiro & Leavitt, P.C.

This entry is presented for informational purposes only and does not constitute legal advice.

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