Hey fellow investors! a friend of mine wanted to invest some money with me in a property I bought, and I need to pay him back his money that he invested and also his share of the profit, I've never done that before, always invested on my own! For profit I can pay him with a 1099 ? But what about the money he put in the property ?
Investor · Hatboro, PA · Member since 2016 · 2k+ posts · 845 votes
10mo
Hi @Zaid Akrem, You’d usually return his initial investment as a capital repayment, that part isn’t taxable. His share of the profit can be reported on a 1099 if it’s structured as a simple investment return, or on a K-1 if it was set up as a partnership. The key is how the deal was structured legally.. debt or equity. If it wasn’t formalized, now’s a good time to document it clearly with a short agreement outlining who contributed what, how profits are split, and how taxes will be handled.