50/ 50 Split ..Is it really a split.. I need objective view
I would like some advice on a 50/50 split project.
I put up the money on a single family home rehab with a family member that is a general contractor.
I paid cash for the house 192K and we estimated about 80K remodel costs. The original mortgage had a clause we had to hold the house for 12 months before it could be sold again and a first time home buyer had to be on the mortgage so we were able to get the house with his 1st time buyer status. After the 15 month rehab was done he was signed off the mortgage and the house reverted just to me to be sold.
We sold the house after 7 days on the market in June, for 410 K after closing costs.
So far I’m showing a pre tax profit of 76K.
We had 143K in repair costs breaking down to materials of 78K ,and labor as (59K) subcontractors required 25 K that I paid,, and 34K that he paid out of the draw.
I had been giving him a draw during the project that he used partially for materials and the rest was going to him I thought. I knew he had some labor type guys working as he was hardly ever there and he had said he was using them, because they were so cheep he could get more $$ doing other projects.
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My agreement with him was “ he was to provide all labor except required contractors”. He gave me a printout of 34K he spent on guys for labor. And now still wants to split the profits. I don’t think that’s correct I told him if I had wanted to use all subcontractors I wouldn’t have agreed to go into the project with him at all.
Am I crazy..
What do I own him ?
Do I withhold from the profits an estimated capitol gains tax before the split also? And then calculate the split after that?
What do I consider the final profit, after I pay his split or before I pay his split. He is a cost so I would think after his cost, than it would be final profit split.
Any suggestions on how to figure this out would be greatly appreciated.