California LLC Tax and Fee for an Apartment Syndication: $800 a Year and the Gross Receipts Fee
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An LLC that is organized in California or doing business there, including an LLC from another state that owns a California apartment building, must pay California's $800 annual LLC tax every year until it is canceled, according to the California Franchise Tax Board. Once the LLC's total California income reaches $250,000, it also owes an LLC fee that rises in steps from $900 to $11,790, based on gross income rather than profit. The annual tax is due by the 15th day of the 4th month of the tax year (April 15 for a calendar-year LLC after its first year), the estimated fee by the 15th day of the 6th month (June 15), and the LLC files Form 568. For most apartment syndications in California, the fee is a fixed cost to budget from year one.
This guide covers who owes, how much, when, and what it means for investors who invest through their own LLCs. For the deal's securities filing in California, see California Rule 506 notice filing.
Who owes the California LLC tax?
Every LLC that is organized in California, registered with the California Secretary of State, or doing business in California. California treats an entity as doing business there if it actively engages in a transaction for profit in the state, or if its California sales, property or payroll exceed thresholds that are adjusted each year. For 2025, the FTB's doing business page lists $757,070 of California sales, $75,707 of California real and tangible property, or $75,707 of California payroll (or 25% of the total). An apartment building in California is far above the property threshold, so the deal LLC is doing business there wherever it was formed.
How much is the fee?
| Total California income | LLC fee |
|---|---|
| Under $250,000 | $0 |
| $250,000 to $499,999 | $900 |
| $500,000 to $999,999 | $2,500 |
| $1,000,000 to $4,999,999 | $6,000 |
| $5,000,000 or more | $11,790 |
"Total California income" is gross income from California sources, so for an apartment deal it is roughly total rents and other income, not net operating income or taxable income. A building can lose money and still owe the top fee.
A worked example (made up)
The numbers below are invented to show the math.
- A Delaware LLC owns a 90-unit building in Sacramento. Its total income for the year is $1,800,000.
- Annual tax: $800. LLC fee: $6,000 (the $1,000,000 to $4,999,999 step). Total: $6,800 a year.
- Over a five-year hold, that is $34,000 before any California income tax effects for investors.
When is it due?
| Item | Due date (calendar-year LLC) | Form |
|---|---|---|
| Annual tax | 15th day of the 4th month (April 15); in the first year, the 15th day of the 4th month after the LLC registers | FTB 3522 voucher |
| Estimated LLC fee | 15th day of the 6th month (June 15) | FTB 3536 |
| LLC return | Form 568, with the partnership's other state reporting | Form 568 |
Underpaying the estimated fee brings penalties and interest. The annual tax is owed every year until the LLC is formally canceled, so cancel the deal LLC after the building sells and the company winds up. See the sale and wind-down checklist.
What about investors who use their own LLC?
When you hold your stake through your own LLC, the FTB counts your LLC's distributive share of the deal's California property, payroll and sales toward the doing-business thresholds. A share of a large building's property can exceed $75,707, which could make your LLC owe its own $800 annual tax and file Form 568. A 2017 California appeals court decision (Swart Enterprises v. Franchise Tax Board) held that a company with a small, purely passive interest in a manager-managed LLC was not doing business in California, which may help some investors. Ask a California CPA before you invest through an LLC. See investing through an LLC or trust.
Individual investors who live outside California may also have California income tax filing and withholding to consider on their share of California income. See state tax returns for nonresident investors.
How DoorRaise fits in
DoorRaise helps sponsors raise equity for apartment buildings with 5+ units from their friends and followers under Rule 506(b) or 506(c). It prepares the standard offering documents, forms the LLC, files Form D and state notices, and verifies accredited investors for 506(c) deals. Escrow is at Enterprise Bank & Trust, an FDIC-insured bank, and investors fund by wire only. See pricing. The deal's own accountant prepares state returns, or the sponsor can add the optional Property Books & Taxes service. DoorRaise is not a law firm, broker-dealer, investment adviser, funding portal or bank.
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FAQ
Does a California LLC pay the $800 tax if it has no income?
Yes. The annual tax is due every year the LLC exists, even if it is not conducting business, until it is canceled.
Is the LLC fee based on profit?
No. It is based on total California income, which is gross, so a deal with high rents and a loss still pays the fee for its income bracket.
Can we avoid the tax by forming the LLC in Delaware?
No. An out-of-state LLC that owns California rental property is doing business in California and pays the same annual tax and fee.
Is there still a first-year exemption?
California's first-year exemption for new LLCs applied to tax years 2021 through 2023. Budget for the $800 from the first year.
Next step: see the rest of the deal's state filings in blue sky notice filings.
Sources
- California Franchise Tax Board: Limited liability company (annual tax, fee and due dates)
- California Franchise Tax Board: Doing business in California (thresholds)
- California Franchise Tax Board: Due dates for businesses
This article is general information, not tax or legal advice. Amounts are as published by the Franchise Tax Board as of November 2026. Talk to a California CPA about your deal. DoorRaise is not a law firm, broker-dealer, investment adviser or funding portal.