Every Las Vegas purchase ends with a deed, and early in escrow the escrow officer will ask how you want to take title. Californians often answer the way they did last time, or do not answer at all. Nevada’s rules are close to California’s but not identical. For a second home or a rental, the choice among your own name, a living trust and an LLC has consequences in both states.
Jimmy Nguyen is a California real estate attorney and a licensed Nevada broker who represents California buyers in Las Vegas through Vegas VIP Me LLC. This is the list of title questions he puts to clients before escrow draws the deed. It describes the questions and the rules behind them. Take the tax answers to a CPA and the estate-planning answers to your estate planner.
1. The words on the deed decide what happens at death
In Nevada, a deed to two or more people creates a tenancy in common unless it expressly says joint tenancy (NRS 111.060 and 111.065). Nevada is a community property state, and property a married couple acquires during the marriage is generally community property (NRS 123.220). A married couple can hold title as community property with right of survivorship, but only if the deed says so (NRS 111.064(2)). Nevada also allows a deed upon death, which names who receives the property when the owner dies (NRS 111.655 to 111.699).
Give the escrow officer the exact vesting in writing before the deed is drawn, and have your estate planner confirm that it matches your plan.
2. A California living trust can hold the Las Vegas home
If you leave Nevada real property in your own name, your estate may need a probate proceeding in Nevada in addition to any in California, because Nevada courts have jurisdiction over a decedent’s property located in Nevada (NRS 136.010). Property held in a revocable living trust generally passes outside probate in either state.
Your California trust can take title at closing, or you can deed the home into the trust later. Nevada does not charge transfer tax on a transfer into a trust without consideration when a certificate of trust is presented (NRS 375.090(7)). A trustee can prove the trust’s authority with a certification of trust instead of the whole trust document (NRS 164.400).
For a home you live in, two things California buyers worry about do not change. The 3 percent property tax cap for a primary residence still applies when the owner has placed title in a trust for estate planning (NRS 361.4723(5)(b)). And federal rules generally bar a lender from calling a home loan because the borrower moved the home into a living trust, where the borrower remains a beneficiary and lives in the home (12 U.S.C. § 1701j-3(d)(8); 12 C.F.R. § 191.5(b)(1)(vi)). For a rental or a second home, get the lender’s written consent before deeding it into a trust.
3. An LLC for a Las Vegas rental: the costs in both states
In Nevada, an LLC costs $75 to form, $150 for the initial list of managers or members, $150 for each annual list after that, and $200 a year for the state business license: about $425 in the first year (NRS 86.561, 86.263, 76.100 and 76.130). Check the Secretary of State’s current fee schedule before filing. An individual whose only business is renting four or fewer units is not treated as a business for the state license (NRS 76.020(2)(d)), so owning a small rental in your own name avoids that fee.
The larger cost is in California. The Franchise Tax Board treats an LLC as doing business in California if any of its members or managers act for it in California, wherever it was organized (FTB Publication 3556). A Nevada LLC managed by a California resident will usually have to register in California and pay the $800 annual LLC tax (Revenue and Taxation Code § 17941). A single-member LLC does not change your income tax either way: its rent is reported on your own return.
Moving a Las Vegas home you already own into an LLC you own 100 percent is exempt from Nevada transfer tax (NRS 375.090(9)). The federal protection for transfers into a living trust does not cover an LLC. If the home has a loan, get the lender’s written consent before deeding it to an LLC. Whether an LLC’s liability protection is worth these costs is a question for a Nevada attorney and your CPA. Vegas VIP Me’s guide to investing in Las Vegas covers the market side of a rental purchase.
4. Transfer tax on the purchase
Nevada charges real property transfer tax on each sale. In Clark County the combined rate is $2.55 per $500 of value, about 0.51 percent (NRS 375.020 and 375.023). By statute the buyer and seller are both liable for it, and the purchase agreement decides who pays (NRS 375.030).
5. Claim the property tax cap
Nevada caps annual property tax increases at 3 percent for an owner-occupied primary residence, and at a higher rate of up to 8 percent for other property (NRS 361.4723 and 361.4722). Clark County mails new owners a postcard to claim the primary-residence cap. Sign it and return it. A second home, and most rentals, get the higher cap. A rental whose rent does not exceed the federal fair market rent can qualify for the 3 percent cap if the owner files a claim (NRS 361.4724).
6. What California can still tax
- While you are a California resident, California taxes all of your income, including Las Vegas rent (Revenue and Taxation Code § 17041(a)). Nevada has no personal income tax (Nev. Const. art. 10, § 1(9)), so there is no other-state credit to offset it.
- After you become a Nevada resident, California taxes only California-source income (§ 17041(b)). Rent from Nevada property is not California-source. Rent from, or gain on, California property still is (Cal. Code Regs., tit. 18, § 17951-3).
- Selling your California home: the federal exclusion of up to $250,000 of gain, or $500,000 on a joint return, generally requires that you owned and lived in the home as your principal residence for at least two of the five years before the sale (26 U.S.C. § 121), and California follows it. California withholding of 3⅓ percent generally applies at closing unless an exemption, such as the principal-residence exemption, is certified (Revenue and Taxation Code § 18662).
- Proposition 19 lets eligible homeowners carry their California property tax base to a replacement home, but only to a replacement home in California (Revenue and Taxation Code § 69.6). A Las Vegas home starts fresh under Nevada’s system.
Vegas VIP Me’s California-to-Nevada tax and residency checklist lists the questions to bring to your CPA.
7. What to settle before escrow draws the deed
- Who will be on title, and the exact vesting words.
- Whether the home goes into your living trust, and a certification of trust ready for escrow.
- Whether a rental goes into an LLC, and if so, the LLC formed and the lender’s consent in hand before closing.
- Who pays the transfer tax, stated in the purchase agreement.
- A reminder to return the county’s property tax postcard after closing.
What Jimmy does
As your Nevada broker through Vegas VIP Me LLC, Jimmy coordinates the vesting instructions with escrow, your CPA and your estate planner so the deed matches the plan. He does not give tax advice. Nevada trust and LLC documents belong with a Nevada attorney.