Private lending minimizing taxes
Hi, we will definitely consult our tax professionals but wanted to brainstorm some ideas before approaching them.
Situation: Private lending for downpayment and rehab costs for fix/flip
We discussed doing a promissory note, return of X% after 6 months. However, that will be taxed as ordinary income (high).
Also discussed promissory note for the principal, then have investor be a small stake shareholder in the LLC. Then, after sale, will keep the money in the account for a year (yes, realize will be paying short term cap gains on this) and then pay it out as dividends(?) so that it is considered long term cap gains for the investor. This route does extend the timeline to repay the investor by quite a bit though. Is this possible?
Any other ideas? Thanks