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[ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] Partnership profit splitting.. Posted by Ward-CA- on September 15, 2003 at 4:01 PM In Reply to: investor & rental posted by Camille Calenda on September 15, 2003 at 10:52 AM : Hi Ward! : We have a rental property that we want to split 50/50 with an investor. My questions are: : 1. If the investor puts up all the cash to buy the property and we rent it out for $1500 per month...how do you split the $1500? : 2. Do they get all the depreciation and write offs? : 3. Do they pay for all the repairs all the time? : 4. Would you do a separate LLC for the property or just have the property have it's own trust tax ID#? : Thanks a lot! : Camille :) =================== Camille, #1. We hold title to the property in a THT (title holding trust). We deposit all income, including the monthly rent, into the trust's checking account. Then every month we pay ourselves a 10%-of -the-rent management fee. Split of INTERIM PROFIT: Then in December of each year we distribute 80% of the account balance in a 50/50 split between ourselves and the beneficiaries (the investors) of the THT (title holding trust). Split of FINAL PROFIT: When we finally dispose of the property we then split the net proceeds after close of escrow on a 50/50 basis between ourselves and the beneficiaries. We take the precaution of holding back $1,000 balance in the bank account for a year following the close of escrow for any expenses that might surface later (like supplemental property tax bills, tax return bills, accounting fees, etc.) #2. The beneficiaries of the trust all the depreciation and write-offs via a partnership tax return. The beneficiaries each get a K-1 for their federal and state tax returns. #3. All costs, repairs, and fees of any kind are paid out from the trust's bank account. #4. Put the property into a THT with its own EIN. Your LLC should be the trustee. Follow Ups: Post a Followup: Name : E-Mail : Subject : Comments: : : Hi Ward! : : We have a rental property that we want to split 50/50 with an investor. My questions are: : : 1. If the investor puts up all the cash to buy the property and we rent it out for $1500 per month...how do you split the $1500? : : 2. Do they get all the depreciation and write offs? : : 3. Do they pay for all the repairs all the time? : : 4. Would you do a separate LLC for the property or just have the property have it's own trust tax ID#? : : Thanks a lot! : : Camille :) : =================== : Camille, : #1. We hold title to the property in a THT (title holding trust). We deposit all income, including the monthly rent, into the trust's checking account. Then every month we pay ourselves a 10%-of -the-rent management fee. : Split of INTERIM PROFIT: : Then in December of each year we distribute 80% of the account balance in a 50/50 split between ourselves and the beneficiaries (the investors) of the THT (title holding trust). : Split of FINAL PROFIT: : When we finally dispose of the property we then split the net proceeds after close of escrow on a 50/50 basis between ourselves and the beneficiaries. We take the precaution of holding back $1,000 balance in the bank account for a year following the close of escrow for any expenses that might surface later (like supplemental property tax bills, tax return bills, accounting fees, etc.) : #2. The beneficiaries of the trust all the depreciation and write-offs via a partnership tax return. The beneficiaries each get a K-1 for their federal and state tax returns. : #3. All costs, repairs, and fees of any kind are paid out from the trust's bank account. : #4. Put the property into a THT with its own EIN. Your LLC should be the trustee. Optional Link URL: Link Title: Optional Image URL: [ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] WWWAdmin 2.0a © 1997 Matt Wright and DBasics Software Company, All Rights Reserved

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