KnoxvilleTN · Member since 2016 · 24 posts · 4 votes
I'm purchasing a house to flip in Tennessee and I have a partner who will be funding the purchase of the property who lives in Florida. We've agreed that I will do the rehab and he the funding for a 50/50 split of the profit. Is there a way to structure the partnership that would put both of our names on deed without creating an LLC? Tennessee doesn't have personal income tax but if we create an LLC we would have to pay state income tax. I'm trying to keep from paying state income tax in the proceeds of the house.
Investor · Member since 2024 · 52 posts · 47 votes
2y
Congrats on your house-flipping venture! It's awesome to hear you've got a partner on board. Here's a friendly breakdown of how you can structure your partnership without forming an LLC and still have both names on the deed.
Tenancy in Common (TIC) is probably the best route for you guys. Here's why it works. Both Names on the Deed: You can both be on the property deed as tenants in common. This means each of you owns a percentage of the property. You can decide how to split it, typically 50/50 for you guys. Flexibility in Ownership: Unlike joint tenancy, tenants in common can own different percentages. If things ever change, one of you can sell your share without affecting the other's ownership. No LLC Needed: This keeps things simpler and avoids the state income tax associated with forming an LLC in Tennessee.
Steps to Set Up Tenancy in Common:
Purchase the Property: When you buy the property, instruct the closing agent or attorney to list both of you on the deed as tenants in common.
Draft an Agreement: While it’s not legally required, it’s smart to have a written agreement detailing each partner’s responsibilities, the split of profits, and how decisions will be made. This can prevent misunderstandings later. Really.... don't do the deal without a written partnership agreement. I've used them and they save a lot of confusion later.
Deed Filing: Ensure the deed is properly filed with the county where the property is located. This formalizes your ownership.
Other Considerations: Capital Gains Tax: Remember, when you sell the property, you’ll need to pay capital gains tax on the profit. This is federal, not state, so it’ll apply regardless of your state’s income tax situation. Legal Advice: It’s always a good idea to consult with a real estate attorney to ensure everything’s set up correctly and to draft any necessary agreements. Make sure to talk with a lawyer!
This way, you both get to be on the deed, avoid the complexities and taxes of an LLC, and keep everything straightforward for your flipping project. Good luck with your flip, and may your profits be as smooth as your renovations!
I'm purchasing a house to flip in Tennessee and I have a partner who will be funding the purchase of the property who lives in Florida. We've agreed that I will do the rehab and he the funding for a 50/50 split of the profit. Is there a way to structure the partnership that would put both of our names on deed without creating an LLC? Tennessee doesn't have personal income tax but if we create an LLC we would have to pay state income tax. I'm trying to keep from paying state income tax in the proceeds of the house.
YES, SIMPLE, sign the contract with both names and title it both names, YES that simple :)