Rental Property Investor · Denham Springs, LA · Member since 2019 · 19 posts · 0 votes
I am about to close on a fix and flip with a partner who is putting up half of the money. We didn't form an LLC before the purchase, so the house is in my name. When we sell how do I accurately split the profits to account for taxes?
CPA · Belleville, IL · Member since 2014 · 255 posts · 269 votes
7y
@Ryan Nodurft, congrats on your first fix and flip! Hopefully it is as profitable as your hoped.
The basics of your transaction are to take the profits, less rehab and basis and each take 50/50. (I'm sure you knew this). From a tax perspective, you'll need to determine if a 1099-S will be issued to either of you at the time of sale for transaction. If so, the one receiving the 1099-s will need to 1099-misc to the other partner. You'll each report the sale and your share of expenses on your 2019 return.
As a CPA, I wholly recommend finding a tax professional that you can work with as you grow and can provide advice for you through this, your first transaction, as well as going forward. A tax expert will be worth their fee in tax savings as well as headaches that they prevent for you! Best of luck and congrats again!
Rental Property Investor · Denham Springs, LA · Member since 2019 · 19 posts · 0 votes
7y
@Jake Hottenrott
Thanks Jake! I'm glad this was an easy one to answer.
I am in the process of of figuring out how to find a good local REI savvy CPA. I am new, so my network is limited, but I'm putting out the feelers. Any recommendations on how to do this and properly vet them to test their specialty in REI?
CPA · Belleville, IL · Member since 2014 · 255 posts · 269 votes
7y
@Ryan Nodurft - My recommendation is to find a few pros who specialize in real estate investing (many of the pros on here do just that) and arrange a conversation. You can get a quick feel to see if that is someone you'd like working with, how thy like to communicate and if you are a good fit to work together. Additionally you can read their posts here to see how they get voted on by other tax pros and if they are able to cite real world cases and tax law to support their positions.
I wouldn't limit my search to local, unless you are someone who HAS to have a face to face meeting every time you meet with someone. Many of the pros here work virtually with clients throughout the US. Also, a local tax pro might work with everyone and any type of tax that walks through the door. They might know enough about real estate tax to be passable, but they might not have specialized knowledge that will really get you the bang for your buck that you are looking for.