TEXAS BUSINESS LAW
Best State to Form a Real Estate LLC: Delaware vs Nevada
The best state to form an LLC for real estate is almost always the state where the property sits — not Delaware, not Nevada. An LLC that owns property in another state must register there as a foreign LLC anyway, so a Delaware or Nevada entity holding a rental house elsewhere ends up paying two sets of filing fees, maintaining two registered agents, and meeting two states’ annual requirements for the same liability protection a single home-state LLC provides. Delaware’s Court of Chancery and Nevada’s privacy marketing solve problems most small investors don’t have.
Here’s how the numbers and the law actually shake out, using Texas — where our firm practices — as the home-state example.
The Home-State Rule
The home-state rule is the practical principle that an LLC holding real estate should be formed in the state where the property is located, because that state’s courts, taxes, and registration requirements govern the property regardless of where the LLC was formed.
Two facts drive the rule:
- Foreign registration is mandatory. Owning and leasing rental property in a state is transacting business there. A Delaware LLC that buys a Texas rental must file an Application for Registration (Form 304) with the Texas Secretary of State and pay a $750 fee — two and a half times the $300 it costs to simply form a Texas LLC in the first place. It must also keep a Texas registered agent and file Texas franchise tax reports, on top of everything it still owes Delaware.
- Litigation happens where the property is. A tenant injury claim, a contractor dispute, or a foreclosure involving a Texas property will be heard in a Texas court applying Texas law. Delaware’s business courts never enter the picture.
What Delaware Actually Costs
Delaware charges a $110 fee to file a Certificate of Formation for an LLC, then a flat $300 annual franchise tax due every June 1 — with a $200 penalty plus 1.5% monthly interest if you miss it. Because you presumably don’t live in Delaware, you’ll also pay a commercial registered agent there every year. Delaware LLCs file no annual report, and the state doesn’t tax LLC income earned outside Delaware, but none of that helps a landlord whose property — and whose tax bill — is in another state.
What Nevada Actually Costs
Nevada is the expensive option. Forming an LLC requires Articles of Organization ($75), an Initial List of Managers or Members ($150), and a State Business License ($200) — $425 just to start. Every year after, you owe $150 for the annual list and $200 to renew the business license: $350 per year, plus a Nevada registered agent. Nevada has no state income tax, but neither do several states where the property might actually sit, including Texas.
Texas as the Home-State Benchmark
A Texas LLC costs $300 to form (Certificate of Formation, Form 205) and is one of the cheapest entities in the country to keep alive. Texas has no annual report fee for LLCs and no state personal income tax. The state’s franchise tax applies only above a no-tax-due threshold of $2.65 million in annualized total revenue for 2026 and 2027 reports — so most small real estate LLCs owe nothing and simply file a free Public Information Report each year. For a closer look at Texas formation generally, see our guide on whether to form your startup in Texas or Delaware and our overview of Texas business entities.
Delaware vs Nevada vs Home State, Side by Side
The table assumes the property is in Texas; the same logic applies with any home state’s numbers.
| Cost / requirement | Delaware LLC | Nevada LLC | Texas LLC (home state) |
|---|---|---|---|
| Formation filing | $110 | $425 (articles + initial list + license) | $300 |
| Recurring state cost | $300/yr franchise tax | $350/yr (annual list + license) | $0 for most (free Public Information Report) |
| Registered agent | Paid agent in DE | Paid agent in NV | Can serve as your own |
| Texas foreign registration | + $750, plus TX agent and franchise tax reports | + $750, plus TX agent and franchise tax reports | Not needed |
| Where property lawsuits land | Texas courts anyway | Texas courts anyway | Texas courts |
The out-of-state structures don’t replace the home-state obligations — they stack on top of them.
The Anonymity Myth
Privacy is the most common sales pitch for Nevada and Delaware LLCs, and it’s weaker than advertised. Delaware doesn’t list members on the public formation record, but Nevada’s required initial and annual lists name the LLC’s managers or managing members. And anonymity rarely survives real life: your lender, title company, insurer, and any litigant with discovery power will identify the owners.
The federal layer changed recently, and in a way that flattens the field. The Corporate Transparency Act originally required nearly all LLCs to report beneficial owners to FinCEN. Under FinCEN’s March 2025 interim final rule, U.S.-formed companies are exempt from beneficial ownership reporting; the requirement now applies only to foreign-formed companies registered to do business in the United States. As of mid-2026 the final rule is still pending, so this could shift again — but today, a Texas LLC and a Nevada LLC sit in exactly the same federal reporting position.
Multiple Properties? Consider a Series LLC
A series LLC is a single LLC that can establish internal series, each holding its own assets and shielded from the liabilities of the others. Texas authorizes series LLCs, which lets an investor isolate each property without forming — and paying for — a separate company every time. The parent files a standard $300 Certificate of Formation with series language; since June 1, 2022, Texas also offers registered series, each created by a $300 filing with the Secretary of State, which gives a series its own state-filed certificate (something lenders and title companies often prefer). Series LLCs demand disciplined recordkeeping — separate books, accounts, and contracts per series — or the internal walls won’t hold.
Frequently Asked Questions
Is Delaware or Nevada better for a real estate LLC?
For most investors, neither. Both add formation costs, annual fees, and a paid registered agent on top of the foreign-LLC registration you’ll still owe the state where the property is located. Between the two, Delaware is cheaper year to year ($300 vs roughly $350 plus agent fees), but the better answer is usually your home state.
Do I have to register my out-of-state LLC where my rental property is?
Yes. Owning and leasing property is transacting business, which triggers foreign registration — in Texas, a $750 filing plus an ongoing registered agent and franchise tax reports.
Does forming in Nevada or Delaware reduce my taxes?
No. Income from real estate is taxed based on where the property is located and where you reside, not where the LLC was formed. A Nevada LLC owning Texas property gets no tax benefit a Texas LLC doesn’t already have.
Should each property have its own LLC?
Separating properties prevents one property’s liability from reaching the others. A Texas series LLC can accomplish that isolation at lower cost than forming multiple standalone LLCs, if you maintain clean records for each series.
Reidel Law Firm forms Texas LLCs and series LLCs for real estate investors on transparent flat fees, so you know the full cost before we start. If you’re structuring a property purchase or cleaning up an out-of-state entity, start with our Texas business law services.
