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Asked about 1 year ago - Rochester, NY
FlagDoes a Florida LLC or Canadian Corporation have to register with the New York Secretary of State if it owns Residential Rental Property from which it earns rental income in Rochester, NY.
Q. Does Earning Rental Income from a residential Property constitute conducting an actual business in New York?
A. Yes. This issue was raised in Supreme Realty Assoc. Co. v. Korovessis, 171 Misc.2d 996, 656 N.Y.S.2d 797 (1977). The issue in that case was, "does ownership of income-generating real property constitute the carrying on, conduct or transaction of business for purposes of GBL § 130?" The court answered in the affirmative.
"It is axiomatic that business is transacted when real property is owned and operated for income-generating purposes. As such, the Court finds petitioner Supreme Realty, as it claims to be the owner and landlord of income-generating commercial property in Bronx County, to be carrying on, conducting or transacting business for GBL § 130 purposes...."
Mike.
Yes it does. A corporate entity (e.g., LLC or corporation) that owns real property in NYS is conducting business in NYS, must file an "Application for Authority" with the Division of Corporations, and is subject to NYS income taxes. The entity must also file various returns with the Department of Taxation and Finance - and the NYC Department of Finance if the real property is located in NYC - including information about the LLC's nonresident members (if it is treated as a partnership for income tax purposes). There may also be certain withholding requirements and the nonresident members of an LLC may be required to file NYS income tax returns.
The only way such an entity escapes the net is if the entity does nothing other than hold legal title as nominee for the benefit of others.
With respect to a Canadian corporation, in addition to the NYS tax issues, you should also make sure that the corporation is complying with its federal obligations, and is claiming appropriate income tax treaty relief, given that it is a non-US corporation operating within the US.
Yes, because property located within the city is being used to generate revenue. Look carefully at your tax returns because this question will be listed on one of the lines. Further, I would consult an attorney about forming an LLC or other protected business structure because if you are not operating this rental income enterprise this way you can be personally liable for significant expenses.
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